Allied Corp. and Signal Cos. announced plans yesterday for a $4.9 billion merger that will create the nation's 16th-largest company out of two widely diversified industrial conglomerates that themselves have been built through a series of mergers and acquisitions.

The combined company, which will have revenue of more than $16.8 billion annually, will have significant interests in chemicals, aerospace, auto parts, electronics, waste-management equipment and heavy-duty engineering and construction operations.

Analysts said they expected the new company, to be called Allied Signal, would concentrate on its strong technology base and would likely sell off other businesses to help pay for the merger.

"Signal has great technology, particularly in aerospace, automotive and electronics," Allied Chairman Edward L. Hennessy said in a statement released from the company's Morris Township, N.J., headquarters. "With that expertise, we're going to accelerate very dramatically Allied's growth in aerospace, automotive, chemicals and electronics."

"This combined company is looking very, very good," said Frank Prezelski, an analyst who follows Signal for Shearson/Lehman Brothers. "This is one of the few really good mergers that I've seen in a long time."

"It's absolutely a beautiful deal," said another analyst, David Bartlett of Ladenburg Thalmann.

But while analysts were enthusiastic, the stock market reacted more cautiously. Signal fell $1.25 to $38.50, and Allied was off $3.875 to $40.

Under the terms of the merger agreement, which was approved by both companies' boards, Allied will pay $45 a share in cash for 20 percent of Signal's 110 million shares, and then exchange a share of stock in the new company for each remaining share. Analysts also valued the latter part of the deal at $45 a share.

The plan was announced at a time when both Signal and Allied were rumored to be looking at another acquisition: that of Hughes Aircraft Co., bids for which were due yesterday.

Analysts speculated that the merger plans grew out of discussions between the two companies about a joint offer for Hughes. Hennessy said late yesterday that Allied had decided against a bid for Hughes.

Analysts said it would be interesting to see how well Hennessy's strong management style mixes with the equally strong styles of Signal's two top executives, Forrest N. Shumway and Michael Dingman.

Under the merger plan, Hennessy will become chairman of the combined company, Shumway vice chairman and Dingman president.

"You do have the potential for conflict here between the three men ," Prezelski said. "They're both powerful companies with powerful egos."

But Prezelski said he felt Hennessy, Shumway and Dingman could find a common ground, and Bartlett said, "I can guarantee you there's a synergism between these people, there's a tremendous synergism, and it will work."

Allied, under Hennessy, has been transformed in the past few years from a somewhat stodgy chemical company into a more technology-based, faster-growing firm. One of its key acquisitions was Bendix Corp., which it bought in 1982 to settle the celebrated takeover battle between Bendix and Bethesda's Martin Marietta Corp. Allied briefly held 38 percent of Marietta, as well, but later sold it back to the Bethesda firm.

La Jolla, Calif.-based Signal has been even more acquisitive, building up a varied portfolio of operations through a variety of takeovers, the most significant being its recent merger with Wheelabrator-Frye Inc. -- a company built by Dingman, in turn, through a series of acquisitions.

Analysts said Shumway and Dingman, in running Signal, have played on its strengths in a variety of areas, notably aerospace parts, waste-processing equipment and engineering and construction.

"They have a good record of taking companies apart, restructuring them and putting them back together, and winding up with something better than they started with," Prezelski said.

Bartlett said he expected those qualities to enable Allied Signal to capitalize on Allied's somewhat less-exploited technology base.

"These guys can take all this technology and turn it into money," he said of Shumway and Dingman. "And Hennessy brings all the technology."

The analysts said they expected the combined company to prune some operations after the merger to enable it to operate more efficiently and pay off some of the debt incurred during the merger.

Candidates for divestiture, they said, include Allied's oil and gas operations, which the company has already begun to sell, and Signal's land holdings and part interests in Mack Trucks and the American President Lines shipping company.