SCHAFFHAUSEN, SWITZERLAND — Tyco International Ltd. announced that its Board of Directors has unanimously approved a plan to separate the company into three independent, publicly traded companies.
The three companies created through the separation will consist of:
• The ADT North America residential security business;
• The world's leading provider of flow control products and services; and
• The world's leading commercial fire and security business.
"Over the last four years, we have strengthened our competitive position in our core security, fire and flow control businesses by driving organic growth, investing in R&D and technology, increasing efficiency and productivity and making strategic acquisitions," said Tyco Chairman and Chief Executive Officer Ed Breen. "Today, each business is in a strong financial position and has exceptional brands, highly skilled employees and talented, experienced leadership."
"In carefully evaluating the opportunities for these businesses and for Tyco as a whole, the Tyco Board of Directors concluded that creating three independent, public companies is the next logical step for Tyco," said Breen. "All three companies will have industry-leading positions in large and fragmented industries and enhanced capabilities to serve their distinct customers. Importantly, the new standalone companies will have greater flexibility to pursue their own focused strategies for growth — both organic and through acquisitions — than they would under Tyco's current corporate structure. This will allow all three companies to create significant value for shareholders."
The company intends to accomplish the separation by issuing tax-free stock dividends of the ADT and flow control businesses to Tyco shareholders, after which Tyco shareholders will own 100% of the equity in each of the three publicly traded companies.
"We will have strong leadership teams at the board and management levels of all three companies, enabling each business to take full advantage of the attractive growth opportunities that lie ahead," said Breen.
As a standalone company, the existing flow control segment will be the leading global manufacturer of flow control products. The company designs, sells and services highly engineered valves and controls for the energy markets, general process industries, mining and water markets. The company's activities also include the design, installation and service of heat management systems for the energy and general process industries, as well as water transmission pipelines and other water/wastewater products. The business will have annualized revenue of approximately $4 billion and approximately 15,000 employees. Patrick Decker, the current president of Tyco's flow control segment, will become the new company's chief executive officer.
Tyco's commercial security business will be combined with the current fire protection segment to form a standalone commercial fire and security company. This company will be a global leader in the design, manufacture, sale, installation and service of security, fire detection and fire suppression systems. The company's commercial security portfolio consists of video and access control products and services for commercial, industrial and governmental customers, as well as anti-theft/electronic article surveillance systems and associated services for retailers. The combined business will have annualized revenue of approximately $10 billion and approximately 69,000 employees. George Oliver, the current president of Tyco's fire protection segment, will become the company's chief executive officer.
The standalone ADT North America residential business will be the leading provider of security and fire alarm systems in North America, serving more than 6 million homes and small businesses. ADT designs, sells, installs, monitors and maintains these systems, and provides video, health, and interactive services to the home. The business will have annualized revenue of approximately $3 billion and approximately 16,000 employees. Naren Gursahaney, the current president of Tyco's security solutions segment, will become the new company's chief executive officer.
One-time transaction costs are expected to total approximately $700 million -- largely for debt refinancing, separation and restructuring costs. It is expected that these costs will be partially offset by lower future interest expense and other operational benefits. Under the proposed transaction structure, the ADT North America residential business is expected to be incorporated in the United States, while the flow control business will be incorporated outside the U.S. The commercial fire and security business will remain incorporated in Switzerland.