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Saturday, Aug. 22, 1998
AMP rejects takeover offer, overhauls management
AlliedSignal criticizes firm's choice of new leadership, vows continued pursuit of electronic connector maker
By PETER DURANTINE
Associated PressHARRISBURG, Pa. -- AMP Inc.'s board on Friday rejected as inadequate the $10 billion takeover offer by AlliedSignal Inc. and overhauled its top management.
AlliedSignal vowed to continue its pursuit of the maker of electronic connectors, and criticized AMP's choice of new leadership.
AMP named Robert Ripp, a former IBM executive who has been with AMP since 1994, as its new chairman and chief executive.
AMP Chairman James E. Marley will retire and Chief Executive William J. Hudson will step down to become vice chairman of the board.
The board was unanimous in rejecting AlliedSignal's tender offer of $44.50 in cash per share for all of AMP's outstanding shares. Its stock closed down $1 at $38 a share Friday on the New York Stock Exchange.
In its recommendations to AMP shareholders, the board said the offer ``does not reflect the inherent value of AMP as the world's largest supplier of electrical and electronic connectors.'' The board has set Oct. 15 for shareholders to decide on AlliedSignal's offer.
The board said it was committed to revitalizing AMP and believes its stock price would increase significantly as it continues to restructure the company through closing plants, shedding divisions and eliminating about 3,500 jobs.
AlliedSignal chief Larry Bossidy vowed to fight for AMP, claiming flawed strategies have eroded the value of the company and calling Ripp too inexperienced to head AMP.
``He has neither the experience nor the track record that should give shareowners confidence that AMP's current restructuring plan will be any more successful than its previous ones,'' Bossidy said. ``It is puzzling that a company in dire operating straits would appoint as CEO someone who had no operating experience prior to this year.''
Ripp called Bossidy's remarks ``strident and entirely inappropriate rhetoric.''
AMP had been in the process of management succession for more than a year, according to the board. Hudson, 64, was scheduled to retire midyear 1999. Marley, 63, was to retire soon thereafter.
Ripp, 57, joined AMP in 1994 and served as chief financial officer until this year when he was named executive vice president in charge of AMP's global business. Before joining AMP, Ripp was vice president and treasurer of IBM.
``I am sharply focused on enhancing the value of AMP for the benefit of all its stakeholders,'' said Ripp, who describes himself as a chief architect of the company's restructuring plan.
One analyst, James Meyer of Janney Montgomery Scott in Philadelphia, said the rejection by AMP may be an attempt to buy time as the board tries to figure out how to enhance shareholder value.
``I think it's a logical step because they can always say yes later,'' Meyer said.
AMP has accused AlliedSignal, which made its hostile takeover bid Aug. 10, of pressuring its 11-member board by urging shareholders to elect 17 pro-AlliedSignal directors and expand AMP's board to 28 members.
The board can defend AMP by voting a ``poison pill,'' which would give shareholders a chance to buy additional stock and boost the cost of a takeover. AlliedSignal filed a federal lawsuit to block the board from using a provision that gives only incumbent members the right to vote on the poison pill.
AMP can also defend itself with Pennsylvania's anti-takeover law that allows the board to consider not only shareholders but other stakeholders including workers, the community and customers in reviewing a buyout offer.
AMP is the world's largest manufacturer of electrical, electronic, fiber-optic and wireless interconnection devices and systems. The company has 48,300 employees in 53 countries. Its sales reached $5.75 billion in 1997.
Morristown, N.J.-based AlliedSignal, with sales last year of $14.5 billion, has 70,500 employees in 40 countries.Post your comments about local news eventsFront Page || Main Index || News || Business || Texas || South Texas Outdoors || Birdwatching || Sports || Entertainment || Selena || Education || South Texas Attractions || World Wide Web