The public battle began last Friday with Honeywell releasing details of the $90.7B acquisition proposal; this was soon followed with rejection comments from UTC later the same day. The official proposal took the form of a presentation that Honeywell Chairman and CEO, Dave Cote, shared with United Technologies Chairman, Edward A. Kangas, and United Technologies CEO, Gregory J. Hayes.

The Honeywell, so called, "Unique and compelling opportunity for shareholders" cited that the benefits of the combination would produce a global leader in attractive end markets tied to advantaged secular growth themes.  The proposal maintains that the merger would offer customers world-class technology and software platforms with a combined R&D capacity of over $8B to invest and substantial operating benefits and cost synergy potential estimated at $3.5B.

The UTC decision to reject the offer is based strongly around regulatory challenges and implies that Honeywell and its advisors are not taking these challenges seriously.  The UTC Regulatory Position statement confirms these views. " Honeywell simply believes it is in its interests to gloss over these fundamental transaction risks in connection with pursuing this opportunistic approach."

UTC, CEO Gregory J. Hayes adds, "United Technologies remains firm in its belief that any combination with Honeywell would encounter insurmountable regulatory challenges in the U.S., EU, China, Brazil, Canada and other markets."

Hayes continues with further comments about his concerns. "There is a high likelihood that the deal could fail and the prolonged review process would have a material negative impact on UTC’s operations, customer relationships and talent retention. It is important to note that after the deal between Honeywell and GE was rejected in 2001 by the European Commission, Honeywell’s stock price fell 38% over the 2000 to 2005 timeframe. In light of this, it would be irresponsible for UTC to move forward with this proposed combination."

In addition to the potential merger facing regulatory problems Hayes also highlights the view that the offer bid is much too low.  "Notwithstanding the significant regulatory challenges and customer concerns, Honeywell’s proposal grossly undervalues UTC and overstates potential synergies. Effectively Honeywell’s proposal is a leveraged buyout of UTC using UTC’s own strong balance sheet."

It seems that although the offer has been rejected there is still momentum in this deal and that tensions are mounting to produce results.