Judge Deals Allied A Blow

A federal judge placed new hurdles in the way of AlliedSignal Inc.'s $10 billion bid to buy AMP Inc., but AlliedSignal's chief executive said Friday the ruling would not deter the takeover.

"We're on course," said Larry Bossidy, chairman of the New Jersey company. "We don't think his commentary or judgments are going to postpone or delay what we're trying to accomplish."

Bossidy told reporters in Williamsburg, Va., that the company would appeal Thursday's ruling from U.S. District Judge James T. Giles but that his company could comply with it.

AlliedSignal intends to purchase 20 million shares of AMP, 9 percent of the company, for $44.50 per share, out of 156.6 million that had been tendered to it.

Giles barred AlliedSignal from trying to persuade AMP stockholders to add AlliedSignal nominees to the board unless they promise to act in AMP's best interest.

"While there's deep questions of legality of what he said ... by and large it doesn't derail us from our intention to move forward," Bossidy said while attending a meeting of The Business Council, a group of CEOs from the nation's largest corporations.

Giles also rejected the company's motion to block AMP from activating a "poison pill," a defense tactic to make the company prohibitively expensive in a takeover fight.

AMP, the world's largest maker of electrical, electronic and fiber-optic connectors, has been locked in a fierce takeover fight with AlliedSignal, based in Morristown, N.J., for more than two months.

Harrisburg-based AMP has rejected AlliedSignal's Aug. 4 offer of $44.50 a share offer as inadequate, even though investors controlling about 71 percent of the company, including the family of an AMP co-founder, have agreed to sell their shares to AlliedSignal.

AMP went to court to try to block an effort to persuade its shareholders to add 17 AlliedSignal nominees to its 11-member board through a written "consent solicitation" that would start Oct. 15.

Giles granted an injunction barring AlliedSignal from making such a proposal "until it states unequivocally that its director nominees have a fiduciary duty solely to AMP."

AMP issued a statement saying company officials were pleased the court recognized the "conflicted nature" AlliedSignal nominees would have.

AlliedSignal officials said their nominees could comply with the ruling by pledging that their duty on the AMP board would be to AMP.

The ruling came two days after the Pennsylvania legislature adjourned without agreeing on a bill to give AMP enhanced protection against a hostile takeover.

Written By BILL BERGSTROM, AP Business Writer