AlliedSignal To Buy Honeywell
Filed at 8:48 a.m. EDT -- June 7, 1999
By The Associated Press
NEW YORK (AP) -- AlliedSignal Inc. is buying
Honeywell Inc. for $13.79 billion in stock,
strengthening its aerospace business with the
addition of Honeywell's control systems, the
companies announced today.
The new company will take the Honeywell name and
the AlliedSignal headquarters in Morristown, N.J.
Honeywell's headquarters in Minneapolis will be
closed. The two companies will cut a total of 4,500
jobs, or 3.6 percent, of their combined work force.
AlliedSignal makes equipment ranging from aircraft
engines and collision early-warning systems, to
wheels and brakes. Honeywell makes control systems
for aircraft, homes and commercial buildings, such
as automatic thermostats for heating.
Shareholders have been watching AlliedSignal
closely since December, when the company was
thwarted in a hostile bid to acquire AMP Inc., a
Harrisburg, Pa.-based maker of electronic connectors
that was instead acquired by Tyco International.
The deal, if approved by the companies' shareholders
and regulatory officials, will be the swan song for
Lawrence Bossidy, chairman and chief executive
officer of AlliedSignal, who retires on April 1, 2000.
Bossidy even hinted at it two months ago, at the
company's annual meeting, when he said, ''I want to
do something big in this company before I leave.''
Both companies' boards of directors have approved
the deal.
Bossidy, 64, will serve as chairman for the combined
company until his retirement. Michael R.
Bonsignore, 58, chairman and chief executive of
Honeywell, will be the new company's chief
executive and assume the additional title of chairman
when Bossidy departs.
The two companies have had on-and-off merger
discussions since 1989, when Honeywell was a
much weaker company. Bonsignore's turnaround of
Honeywell made the company a stronger potential
partner and proved to Bossidy that Bonsignore could
fill his shoes.
''As I looked at Honeywell and saw what Mike had
done over the last six years in improving their
outlook, I got more interested,'' Bossidy said in an
interview today with The Associated Press.
The hardest issues to resolve, the executives said,
were the company name and headquarters.
Honeywell has been based in Minneapolis for 114
years, and currently employs 7,500 in the Twin
Cities area. The two companies agreed to keep 6,000
jobs in the area and maintain its philanthropic
commitments.
For AlliedSignal, the company loses the name
created in 1985 by the merger of Allied Corp. and
the Signal Cos.
''They have a better worldwide brand than we did, so
we made a concession on that point,'' Bossidy said.
The companies expect to save $500 million within
two years by integrating their research and
development and purchasing. The new company will
eliminate 2,000 jobs within the first six months after
the deal closes and another 2,500 the following year.
Rumors about the deal circulated around Wall Street
late last week. On Friday, Honeywell's stock jumped
$9.12 1/2 to $105 on Friday, a new one-year high,
on the New York Stock Exchange, while
AlliedSignal's shares dipped $2 to $58.37 1/2.
Honeywell shareholders will receive 1.875 shares of
AlliedSignal common stock -- worth $109.45 based
on Friday's close -- for each share of Honeywell they
own.
AlliedSignal also will assume $1.5 billion of
Honeywell's debt, but the synergies and cost savings
of the combined operations are expected to add 17
cents a share to earnings of the combined companies
in 2000, and 32 cents a share in 2002.
Honeywell earned $572 million on sales of $8.02
billion last year. AlliedSignal made a $1.33 billion
profit on sales of $15.13 billion.
Copyright 1999 The New York Times Company |
