EXHIBIT 99.1
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ALLIEDSIGNAL AND HONEYWELL TO MERGE,
CREATING $25 BILLION GLOBAL TECHNOLOGY COMPANY
EPS Accretion Expected To Be $0.17 In 2000, Increasing To $0.32 In 2002
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AlliedSignal's Bossidy To Be Chairman; Honeywell's Bonsignore To Be CEO
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Combined Company To Be Called Honeywell
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New Senior Management Team Formed; Key Merger Integration Leaders Selected
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MORRISTOWN, NJ and MINNEAPOLIS, MN, June 7, 1999 - AlliedSignal Inc.
(NYSE: ALD) and Honeywell Inc. (NYSE: HON) announced today that they have
signed a definitive merger agreement which will create a global technology
company with revenues of $25 billion and technical and product leadership
across a wide range of industries. The all-stock merger is expected to be
immediately accretive to earnings per share, with an estimated EPS benefit
of $0.17 in 2000, rising to $0.32 in 2002.
The merger combines two global players to create a Fortune 50 company
that brings together deep management talent and diverse, successful, and
complementary businesses. With a combined market capitalization in excess
of $45 billion, the new company will have the financial strength,
technology leadership, customer focus and Six Sigma process discipline to
accelerate future growth across its businesses. The combined company will
be called Honeywell and will be headquartered in Morristown, NJ.
Under the terms of the agreement, each share of Honeywell common stock
will be exchanged for 1.875 shares of AlliedSignal common stock. Based on
126 million Honeywell shares outstanding and AlliedSignal's current stock
price, the transaction is valued at more than $14 billion. The new company
will also assume approximately $1.5 billion of Honeywell debt. The
transaction is expected to be tax-free to shareholders and will be
accounted for as a pooling of interests. It is expected to close in the
fourth quarter of 1999.
Lawrence A. Bossidy, 64, Chairman and CEO of AlliedSignal, will be the
new company's Chairman and, until his retirement on April 1, 2000, will
focus on integrating the two companies. Michael R. Bonsignore, 58, Chairman
and CEO of Honeywell, will be the new company's Chief Executive Officer.
The Board of Directors of the new company will be comprised of nine members
from the current AlliedSignal Board and six members from the current
Honeywell Board. Upon Bossidy's retirement, Bonsignore will become
Chairman.
Reporting to Bonsignore will be two Chief Operating Officers: Robert
D. Johnson, currently President and CEO of AlliedSignal's Aerospace
organization, and Giannantonio Ferrari, currently Honeywell's President and
Chief Operating Officer. Johnson will have responsibility for the combined
aerospace operations headquartered in Phoenix, Arizona, which will be the
new company's largest single segment with approximately $10 billion in
annual revenues. Ferrari will have responsibility for all of the other
businesses of the combined company, which have total revenues of
approximately $15 billion: industrial controls, home and building controls,
turbochargers and other transportation products, specialty chemicals, and
performance polymers.
Key staff appointments include Peter M. Kreindler (AlliedSignal), Law;
James T. Porter (Honeywell), Information and Business Services; Donald J.
Redlinger (AlliedSignal), Human Resources and Communications; Richard F.
Wallman (AlliedSignal), Finance and Planning; Kris Burhardt (Honeywell),
Technology; and Ray Stark (AlliedSignal), Quality.
A joint integration team has already been established to drive rapid
planning and execution of the integration of the two companies. Stark,
currently AlliedSignal's Vice President of Six Sigma and Productivity, and
Bill Hjerpe, currently President of Honeywell Europe, will lead the
integration team, which will report to an Executive Office including
Bossidy, Bonsignore and the Chief Operating Officers. The integration is
expected to be completed prior to Bossidy's retirement on April 1, 2000.
The new company's Aerospace organization will combine Honeywell's
strengths in sophisticated avionics with AlliedSignal's strengths in
flight-safety products and systems to create a preeminent global provider
of integrated solutions for all classes of aircraft. These broader customer
channels, combined with AlliedSignal's strong aerospace aftermarket
presence, will significantly increase the scope of the new company's
aerospace businesses and position them for accelerated growth.
"The merger is an exciting natural fit of two companies whose
businesses and cultures are highly complementary," Bossidy said. "We are
both successful, growth-driven technology companies who are intensely
focused on performance, delighting customers, and making our workplaces
world-class. The merger will ideally position the combined entity for
enhanced revenue and income growth. AlliedSignal's Board and I have long
admired the outstanding job that Mike Bonsignore and his team have done in
transforming Honeywell into a knowledge-based, technology-driven provider
of solutions and services. His proven management skills will lead the
combined company into a new era of dynamic growth."
"Larry Bossidy has won widespread respect for transforming
AlliedSignal into one of the world's most admired companies, driving
consistent growth in earnings and cash flow and creating significant value
for shareowners, customers and employees," Bonsignore said. "Together we
are creating a global corporation with vast potential and the strong
balance sheet, management depth, technology leadership, vision and
discipline to reach ambitious financial goals. These goals include annual
EPS growth in excess of 15%, revenue growth of 8-10%, and free cash flow
exceeding $2 billion by 2002. We will be well positioned to augment strong
organic growth with strategic acquisitions. I am delighted Larry will be
working closely with me to assure the rapid and successful integration of
these two highly complementary companies."
The companies expect to achieve annual cost savings of approximately
$500 million by rationalizing overhead costs, accelerating Six Sigma
implementation, integrating research & development, and achieving
procurement efficiencies. These savings are expected to begin immediately
upon closing and to be fully realized by 2002. The combined company will
have a work force of more than 120,000 employees after the integration is
complete, reflecting the elimination of approximately 2,000 jobs within the
first six months after closing and approximately 2,500 additional job
reductions in the following year. Although Honeywell's Minneapolis
headquarters offices will be closed, the new company will continue to have
over 6,000 employees in the Twin Cities area and its commitments to the
local community, including philanthropic programs, will be unaffected.
"We will be a world-class company in every sense of the word," Bossidy
said. "Growth and productivity will be our dual focus. Combining
Honeywell's proven strengths with those of AlliedSignal will enable us to
reduce cyclicality while enhancing earnings consistency."
The merger, which has been unanimously approved by the Boards of both
companies, is subject to approval by shareholders, regulatory authorities
and customary closing conditions.
Bear, Stearns & Co. Inc. served as financial advisor to Honeywell and
rendered a fairness opinion to Honeywell in connection with the
transaction. J.P. Morgan rendered a fairness opinion to AlliedSignal.
AlliedSignal Inc. is a $15 billion advanced technology and
manufacturing company serving customers worldwide with aerospace and
automotive products, specialty chemicals, performance fibers, plastics and
advanced materials. It is one of 30 stocks that make up the Dow Jones
Industrial Average and is also a component of the Standard & Poor's 500
Index. Additional information is available at www.alliedsignal.com.
Honeywell is the world's leading provider of control technologies for
buildings, homes, industry, space and aviation. The company has operations
in 95 countries and had 1998 sales of $8.4 billion. Additional information
is available at www.honeywell.com.
# # #
This release may contain forward-looking statements about future business
operations, financial performance, and market conditions. Such statements
are subject to certain risks, uncertainties and other factors, including
changing economic conditions, international trade and monetary factors,
which can affect the companies' businesses, and cause actual results to
differ materially from those contained in any forward-looking statements.
These factors are described in the companies' Annual and Quarterly Reports
on Forms 10-K and 10-Q. Copies of such reports may be obtained from the
companies or reviewed on the SEC's EDGAR system at www.sec.gov.
Contacts: For AlliedSignal For Honeywell
Media: Harry Savage/Mike Millican Media:
Tom Crane Robert Marston & Associates Melissa Young
(973) 455-4732 (212) 371-2200 (612) 951-0773
(800) 980-0557 (pager)
Investors: George Sard/Debbie Miller Investors:
John Stauch Sard Verbinnen & Co. Scott Clements
(973) 455-2222 (212) 687-8080 (612) 951-2121
ANALYST AND PRESS MEETING:
You are invited to attend an analyst and press meeting to be hosted by
Larry Bossidy, CEO of AlliedSignal, and Mike Bonsignore, CEO of Honeywell,
today at 9:30 a.m. (EDT) in New York City at The Equitable Building, 787
Seventh Avenue (at 51st Street), in the Tower Room, 50th Floor. If you are
unable to attend, you may access a simultaneous interactive conference call
by dialing (800) 553-3587, or 415-217-0050 from outside the United States,
no later than 9:20 a.m. (EDT). The meeting will be rebroadcast from Monday,
June 7, 1999 at 1:00 p.m. (EDT) to Wednesday, June 9, 1999 at 7:00 p.m.
(EDT). To access the rebroadcast, please dial 1-800-625-5288, or
303-804-1855 from outside the U.S., and enter confirmation ID number
555183.