General Electric Co.‘s bid to buy Honeywell Int’l Corp. appeared to be in peril on Thursday as the companies’ last-ditch divestiture offers aimed at salvaging the $41.7 billion deal fell far short of the European Union’s (EU) regulatory demands. The two companies said they were “not optimistic” that antitrust officials of the 15-nation EU would approve the deal, despite offering to sell assets that generate $2.2 billion in revenues annually.

GE Chairman and CEO Jack Welch, who postponed his retirement to help shepherd the Honeywell transaction to completion, said the companies’ offer was final. Welch voiced dismay at the EC demands. “GE Chairman-elect and President Jeff Immelt and I wanted to complete the transaction, but we have always said there is a point at which we wouldn’t do the deal. The commission’s extraordinary demands are far beyond that point,” he says. “In this case, the European regulators’ demands exceeded anything I or our European advisors imagined, and differed sharply from antitrust counterparts in the United States and Canada.”

The news sent Honeywell shares plummeting, a sign investors are growing increasingly worried that the deal would be blocked. Honeywell shares shed as much as 15 percent of their value in early trading on the New York Stock Exchange, before recovering slightly to close the day down $5.16, or 12 percent, at $37.10. GE climbed as high as $50.20 before closing the day up $1.01 at $48.86.

The Honeywell acquisition has already won approval from the U.S. Justice Department which, in recent days, has sent at least one high-ranking official to Brussels to work with European regulators on the review. Analysts said while the two sides appear to have reached a stalemate, the commission still has nearly a month to work out a compromise with the two U.S. firms.

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