The Firestone Tire & Rubber Company and Borg-Warner Corp. yesterday announced plans to merge.

The nation's second largest tiremaker and the diversified industrial equipment company would operate as separate entities under a new Chicago-based holding company which as yet has no name.

Richard A. Riley, Chairman and Chief Executive Officer of Firestone and James F. Bere, Chairman and Chief Executive of Borg-Warner made the joint announcement in New York.

Akron, Ohio-based Firestone is the nation's 46th largest industrial company with sales last year of $4.4 billion, while Borg-Warner, headquartered in Chicago, ranked 127th with sales of $2 billion.The combined company, with $6.4 billion in sales would rank in the top 25 industrial firms - almost as large as Goodyear, the largest tiremaker in the country.

If the merger is approved by the stockholders of each company, Riley would serve as Chairman and Bere as President of the new holding company.

The two executives said "such a partnership would enhance the considerable strength of each company and provide significant benefits to shareholders, employes, customers and the communities where each have operations."

Firestone is facing troubled times because of an announced recall of an estimated 7.5 million automobile tires, the government had charged that the tires - Firestones 500 steel-belted radials - were unsafe.

The recall could cost Firestone more than $100 million, almost exactly the amount of money each of the two companies earned last year.

"I view Firestone's difficulties as temporary and am truly excited about the prospect of our two great companies coming together," said Borg-Warner's Bere, who has served as a director of Firestone since Jan. 1977.

According to Firestone's Riley, "We have long recognized the potential advantages of diversifying our business, and the proposed merger certainly accomplishes this objective."

The new holding company initially will have three classes of securities common stock, convertible preferred stock and debentures.

One share of holding company stock will be exchanged for each of Borg-Warners 21.5 million shares of common outstanding. It is intended the stock will pay an initial annual dividend of $2 a share. Firestone paid $1.92 a share in 1977, while Borg-Warner paid $4.93.

Firestone shareholders would receive either convertible preferred stock or debentures with a minimum of 30 percent stock or debentures with a minimum of 30 percent and a maximum of 40 percent of Firestone's 57.6 million common shares outstanding being exchangable for debentures.

Firestone spokesman Bernard Frazer said the companies have "informally discussed this possibility at different times in recent years."