NEW YORK (CNNfn) - European antitrust regulators have asked General Electric Co. to spin off its aircraft leasing and financing arm, which could end GE's $41 billion bid for Honeywell International Inc., press reports said Friday.|
The European Commission has indicated that GE should spin off its Capital Aviation Services business to existing shareholders, the interactive version of the Wall Street Journal reported.
GE's aircraft leasing arm, Gecas, offers aircraft financing, leasing, and fleet management. European regulators are concerned about GE's ability to bundle products when offering equipment to airlines.
Fairfield, Conn.-based GE (GE: down $0.77 to $48.14, Research, Estimates) has ruled out any full divestitures but is willing to introduce management separation and change its Gecas purchasing policies, the WSJ said, citing people familiar with the negotiation.
Gecas's market power is one of the major hurdles in GE's attempt to secure regulatory approval, the Journal said.
GE has also offered more sweeping divestitures from Honeywell's extensive line of avionics products. The commission has been pressuring GE to sell businesses because the combined firm would be able to offer discounted packages of GE's jet engines and Honeywell's avionics, which would hurt competitors, the WSJ said.
Earlier this week, press reports had GE considering selling the regional-jet engine business of Honeywell. The $40 billion merger of GE and Honeywell will create a near-monopoly on engines for large regional jets, press reports have said.
The complex negations also caused European Competition Commissioner Mario Monti to cancel a meeting with GE CEO Jack Welch. Negotiations are to resume Monday with Welch slated to meet with Monti next Wednesday or Thursday.
Both GE and Honeywell (HON: down $2.24 to $46.51, Research, Estimates) were unavailable for comment.