MPR: 'A marriage made in hell'

'A marriage made in hell'
By Bill Catlin, Minnesota Public Radio
July 3, 2001
Second of two parts

The European Commission has formally rejected General Electric's purchase of Honeywell International, a deal originally valued at $45 billion. The veto cost Honeywell CEO Michael Bonsignore his job. The failed deal caps two troubled years for Bonsignore, who has won praise for both his business success and community involvement in the Twin Cities.

Michael Bonsignore is an electrical engineer whose tenure with Honeywell dates back to 1969. He took the reins as CEO in 1993. Bonsignore was considered one of the most successful executives in Honeywell's history.

THE EUROPEAN VETO leaves Honeywell in a difficult position. Company observers point to likely morale problems, talent defections, and little forward momentum after eight months of preparing to become part of GE. The company's share price has fallen from a high of around $55 after the merger announcement, to about $35 today. The failed GE buyout follows Allied Signal's troubled purchase of the former Honeywell in 1999. And for better or worse, Honeywell's CEO Michael Bonsignore appears likely to get much blame for both.

"I suspect most people will remember him as the architect of two failed mergers," says Fred Zimmerman, a University of St. Thomas professor of manufacturing, and an early critic of the Allied Signal buyout.

Wall Street liked that deal at first. But investors dumped the stock six months after its completion, when Bonsignore stunned Wall Street and said profits would fall short of analysts' predictions. Just weeks before, he'd said the company was on track to meet those estimates. Around the same time, Bonsignore began merger talks with the Hartford-based industrial conglomerate United Technologies, which eventually led to GE's buyout offer. A Honeywell spokesman declined to comment on Bonsignore's legacy, but Zimmerman says it features dubious deals, especially the combination with Allied Signal.

"It was pretty apparent before going into the merger that this was a company that had weak performance in many of its key segments," he said.

Bonsignore is an electrical engineer whose tenure with Honeywell dates back to 1969. He took the reins as CEO in 1993. University of Minnesota professor of strategic management and organization Alfred Marcus says Bonsignore was one of the most successful executives in Honeywell's history. "When he first started, it was in pretty bad shape, and he took it and he molded it and he turned it around. He went to the East Coast triumphant. This was considered to be a terrific deal for both Allied Signal and Honeywell," according to Marcus.

But Marcus says the deal was a marriage made in hell, a combination of two enterprises with conflicting management priorities, innovation at Honeywell, cost control at Allied Signal. Many observers expect the Hartford-based industrial conglomerate United Technologies to make another offer for Honeywell after losing out to GE last October.

"His legacy in Phillips and Minneapolis is that he was a good community partner and helped build some community housing and other programs."

- Jim Scheibel

But Marcus says United Technologies could be dissuaded because its competitor - GE - spent so much time peering into every aspect of Honeywell's business. "I think it would be extremely peculiar for me to want to buy a business that my key competitor knows everything about," Marcus said.

Marcus says Bonsignore's reputation may be tainted, but he's still well regarded in the Twin Cities business community and community at large. Jim Scheibel, with Project for Pride in Living, seconds that. PPL is based a few blocks from the former Honeywell headquarters in the Phillips neighborhood of Minneapolis and received Honeywell funding for housing and training programs.

"His legacy in Phillips and Minneapolis is that he was a good community partner and helped build some community housing and other programs. We really miss him. We miss Honeywell not having the same presence in the neighborhood. We would welcome them back," Scheibel said.

But if Bonsignore's record includes helping many disadvantaged people in Minneapolis, it also involves disrupting thousands of employees lives, people who either lost their jobs in the troubled Allied Signal merger or who survived two years of turmoil with the company, with more now to come.

Previous story: EU rejects Honeywell-GE merger

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