AMP Urges Holders to Nix Allied Offer

AMP Inc. on Friday urged shareholders to spurn a $9.8-billion buyout offer from AlliedSignal Inc., saying that it’s too low and that the world’s biggest maker of electrical connectors doesn’t fit with AlliedSignal’s business.

As part of its plan to fight the takeover, AMP named Robert Ripp, its 57-year-old executive vice president of global businesses, chairman and chief executive. Ripp, who is in charge of the company’s plan to buoy its shares by closing five plants and cutting 7.5% of payroll by 2000, replaces James Marley as chairman and William Hudson as chief executive. Marley will retire, and Hudson will remain as vice chairman.

Harrisburg, Pa.-based AMP also said its board strengthened the company’s “poison pill” anti-takeover plan to help ward off the offer.

Morristown, N.J.-based AlliedSignal, which makes chemicals and automobile and aerospace parts, said it will press on with its $44.50-a-share cash offer and expects AMP shareholders to accept.

AMP shares fell 50 cents to close at $38.50 on the New York Stock Exchange, signaling that some shareholders and analysts expect AlliedSignal to fail.

AMP shares have dropped by about half in 10 months as the Asian economic slump weakened demand for connectors used in everything from mobile phones to washing machines.

“The offer is nothing more than an attempt to buy AMP on the cheap,” Ripp said. He said AMP’s advisors are considering options such as restructuring its balance sheet or share repurchases to boost its stock.

“AMP has had ample opportunity to restructure and fix the company,” said AlliedSignal Chairman and Chief Executive Lawrence Bossidy, “but its ability to change on its own is at best improbable.”

AlliedSignal on Aug. 4 announced its offer to buy AMP at a 55% premium to AMP’s closing price of $28.63 the day before. The offer is scheduled to expire Sept. 11.

AlliedSignal shares fell $1.56 to close at $37.44, also on the NYSE.