Time was running out on Larry Bossidy. Set to retire early next year, the hard-charging head of industrial conglomerate AlliedSignal Inc. wanted one more deal under his belt before he left. A hostile bid for electronics-component maker AMP Inc. last year came up empty.

So, yesterday, Bossidy agreed to pay close to $15 billion to buy Honeywell Inc.

In doing so, Bossidy gets a company that invented the home thermostat but has since expanded into software for "smart" bombs and aircraft cockpit control systems, all businesses that complement AlliedSignal's own position as the market leader in flight-safety devices for airplanes and aircraft engines. Together the two companies will form an aerospace giant with more than $23 billion in annual sales.

Bossidy, 64, also gets a successor in Honeywell chief executive Michael R. Bonsignore, 58, who will take over as chief executive of the combined company and become chairman in April when Bossidy retires.

"As I looked at what Honeywell has achieved under Mike's direction, here was a chance to do two things at the same time," Bossidy said.

AlliedSignal is offering Honeywell shareholders 1.875 shares of stock for each of their own, for a total value of $13.23 billion based on AlliedSignal's Friday close. AlliedSignal also will assume $1.5 billion in Honeywell debt.

The shares of both companies soared on the news yesterday in trading on the New York Stock Exchange. AlliedSignal rose $4.43 3/4 a share, to $62.81 1/4, while Honeywell surged $7 a share, to $112, after rising more than $9 a share Friday as rumors swirled in the markets that the company was a takeover target.

Bossidy said in an interview the deal completes two of his desires for AlliedSignal: expanding the company's business and finding a successor.

The deal, rumored over the weekend after Honeywell shares surged on Friday, had been under negotiation since April. Both sides made great concessions to pull it off. AlliedSignal won in having the combined company headquartered in Morristown, N.J., rather than in Minneapolis -- Honeywell's longtime headquarters. But the company will bear the Honeywell name going forward.

Bossidy said the addition of Honeywell will allow both companies to cut some $500 million in costs, along with 4,500 employees over the next 1 1/2 years. Much of Honeywell's corporate headquarters staff is expected to be cut or relocated from Minneapolis.

AlliedSignal, with about $15 billion in sales, is the market leader in flight-safety systems and also a big player in the aircraft-repair business. It also makes aircraft parts such as engines and wheel brakes, and has a specialty chemicals unit. Honeywell is an $8 billion company that specializes in electronic and software-driven controls for home and businesses; it also makes guidance and control systems for airplanes.

"This looks to me like AlliedSignal is moving up the aviation food chain," said James McAleese, a McLean lawyer who works for aerospace companies. "It solidifies their control of the cockpit."

While AlliedSignal's unsuccessful $10 billion bid for AMP was seen as an opportunity for Bossidy to buy an undermanaged company on the cheap, analysts said that in purchasing Honeywell, AlliedSignal was getting a company that has improved its performance in the past five years.

"This was a successor acquisition as much as a diversification acquisition," said William Fiala, an analyst at Edward D. Jones & Co., a St. Louis-based brokerage.

Bossidy came to AlliedSignal in 1991 after a long career at General Electric Co., where his last post was vice chairman. He quickly revamped the dowdy industrial company, selling off underperforming businesses, buying new ones and replacing much of the company's senior management. Bossidy is a burly executive known for speaking his mind; his hallmark has been delivering consistent earnings performance in good times and bad, missing only one quarter in the past six years and then by only a penny a share.

Bonsignore, a U.S. Naval Academy graduate who forsake a military career for an engineer's job at Honeywell, is less well known than Bossidy but is respected as having brought a sense of management to a company that, while long revered for its technological brilliance, is historically something of an underperformer.

"I think our styles are sufficiently similar [that] we're not going to ask the whole organization to reinvent itself as we hand the baton off to one another," Bonsignore said.

The combined company will have $1 billion in cash flow and the financial leverage to make other acquisitions, Bossidy said, while being able to combine research and sales efforts to market complete systems to airline and military customers.

"The combination is going to have $10 billion in acquisition power," said Todd Ernst, an analyst at Prudential Securities Inc. "You've got an aerospace powerhouse that's going to be extremely competitive."

Companies in Profile

AlliedSignal has agreed to buy Honeywell in a stock deal worth about $15 billion.

AlliedSignal

Business: Manufactures aerospace and automotive products.

Based: Morristown, N.J.

Established: 1920

Employees: 70,400

1998 revenue: $15.13 billion

1998 earnings: $1.33 billion

Web site address: www.alliedsignal.com

Yesterday's closing stock price: $62.81 1/4, up $4.43 3/4 (ticker ALD on the NYSE)

Honeywell

Business: Manufactures automation and control systems.

Based: Minneapolis

Established: 1927

Employees: 57,000

1998 revenue: $8.43 billion

1998 earnings: $572 million

Web site address: www.honeywell.com

Yesterday's closing stock price: $112, up $7 (ticker HON on the NYSE)

SOURCE: The companies, Bloomberg News

CAPTION: Honeywell chief executive Michael R. Bonsignore, left, will be CEO of the company created by the merger. He will add the title of chairman in April when AlliedSignal chief Lawrence A. Bossidy, right, retires.