Honeywell (HON) clearly doesn't want to let go of its bid for United Technologies (UTX).
And Friday, UTX countered Honeywell's recent arguments that a tie-up between the two manufacturers wouldn't encounter significant antitrust road blocks, and could unlock $72 billion in value for shareholders. Honeywell had rolled out the details of its investment pitch earlier in the day, and has said talks with UTX shouldn't have fallen apart over overblown regulatory concerns.
"I want to take this opportunity to set the record straight on a number of issues," UTX CEO Gregory Hayes said in a filing with the Securities and Exchange Commission, "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."
The company added the deal would be "blocked outright" and that Honeywell has not adequately accessed the risks of antitrust regulators blocking the deal.
"The value destruction from the cloud of uncertainty hanging over our businesses, employees and customers during an extended review period would be significant, and, under Honeywell's proposed construct, borne much more heavily by United Technologies and our shareowners," Hayes said. "The most recent public statements made by Honeywell and its advisors have reinforced our assessment that Honeywell simply believes it is in its interests to gloss over these fundamental transaction risks in connection with pursuing this opportunistic approach."
Earlier in the week, Honeywell downplayed antitrust obstacles and highlighted what could amount to substantial cost-cutting opportunities through business overlaps.
"The value creation from a combination is significant, including the benefits of $3.5 billion in annualized cost synergies," Honeywell said in a statement Tuesday. "We do not see the regulatory process as a material obstacle to a transaction. In fact, a combination would benefit our customers and enhance our ability to offer a more comprehensive and compelling suite of technologies to serve their needs. Honeywell believes the combined company's financial profile would be stronger than the highest valued peers in the multi-industry group today, creating an opportunity for incremental value for both sets of shareowners over the short- and long-term."
The last straw for UTX appears to be when Honeywell doubled down on its argument with its Friday presentation, unveiling the financials discussed behind the deal and the supposed value creation that would result from a merger. Honeywell said it would pay UTX shareholders $42.63 in cash per share, along with discounted Honeywell stock, and that the tie-up would create $72 billion in value between the two companies.