Allied-Signal’s Hennessy Stepping Down

Allied-Signal Corp. announced that its chairman and chief executive, Edward L. Hennessy Jr., is stepping down from the $12-billion industrial conglomerate.

Lawrence A. Bossidy, 56, vice chairman of General Electric Co., will succeed Hennessy, 63, as chief executive Monday. Hennessy will remain as chairman until the end of the year, when Bossidy will also assume those duties.

Wall Street welcomed the announcement, which analysts said reflected a perception that Allied-Signal was not managed for short-term performance. In consolidated New York Stock Exchange trading, Allied-Signal closed up $3.87 1/2 at $33.25 a share.

“Hennessy brought Allied from a cyclical chemical company to a global and diversified conglomerate,” said Carol Neves, an analyst with Merrill Lynch & Co. “But in the last few years, the market has been impatient that his strategy was more long-term oriented.”

Hennessy has said one potential area of improvement is the $5.3-billion aerospace division, where reducing inventory could save up to $500 million annually.

Analysts said Bossidy may consider extracting the company from several joint ventures and selling off a 39% stake in Union Texas Petroleum, thus bringing in more than $1 billion to trim debt.

Bossidy is a career General Electric employee who has overseen the company’s lighting, engineered materials, power systems and financial and information services businesses.