What Now, HON?

It can be hard to face the future. Especially if that future used to look certain and neat but suddenly has become unpredictable and vague. Consider the plight of Honeywell.

Yesterday, that firm’s board of directors issued a statement expressing its “full commitment” to merging with General Electric, notwithstanding the objections of European regulators. “The Honeywell Board said it expects that GE will do everything possible to secure regulatory approval for the transaction,” the statement read.

If that’s so, then the board members must not be enjoying today’s news very much. In the Wall Street Journal, a few pages away from the article noting Honeywell’s “commitment,” today’s installment of the “In The Lead” column finds outgoing GE CEO Jack Welch talking about the deal more or less in the past tense. Welch, Carol Hymowitz writes, “flew back from talks in Brussels with [European] regulators late Thursday and was at his desk at GE’s Fairfield, Conn., headquarters the next day, telling subordinates that the Honeywell deal was dead—and that they should move on.” She goes on to quote Welch from an interview she apparently conducted on Friday: “The sun came up this morning and GE looks great. We were a great company before [agreeing to acquire Honeywell], and we’re a great company today.” If that’s not clear enough for you, GE’s incoming CEO, Jeffrey Immelt, is being quoted in wire stories this morning as having told Le Monde that the chances for the deal to go through at this point are “zero.”

It would seem, then, that someone needs to tell Honeywell to move on. But I suppose that that’s a tougher pill to swallow for that firm than it is for GE. Whatever effect a scuttled deal might have on the pride of GE’s top managers, the firm’s shares are up slightly since it started to look last week like the deal would fall apart. HON shares have quietly trembled and were off about $1.25 this morning shortly after a generally upbeat opening for the broader markets.

At this point a shareholder might wonder whether Honeywell’s board and managers have given any thought to Plan B: what to do about their actual company, whose earnings have been weak. So far there’s been only speculation about another acquirer (such as United Technologies) showing up, and maybe that will happen. Certainly Honeywell must see a lot of uncertainty when it tries to look into the future and, again, that can be hard to face. On the other hand, refusing to deal with the future at all can make you look pretty foolish. Which is what the company’s board must be learning this morning.