BOCA RATON, Fla. — Tyco Int’l will split into three stand-alone, publicly traded entities under a reorganization plan announced Monday.
The new companies will be ADT North America residential security business; Tyco Fire and Security; and, Flow Control.
Tyco’s Chairman and CEO Ed Breen announced the move during a conference call with investors and the media. The conglomerate may draw experience from a 2006 break-up plan, when it spun off its medical products company Covidien PLC and electronics maker Tyco Electronics Ltd. (now TE Connectivity).
Since 2007, the board has contemplated further spinoffs, but held off to strengthen its business, Breen said.
“We thought these three businesses could be run much better than they were being run,” he said. “They were more fragmented at that time, and there wasn’t consistent performance. The businesses are all performing well — there is nothing wrong with them. Each operates in different end markets. We firmly believe that these businesses can best achieve their full potential as stand-alone independent companies, rather than under the current Tyco structure.”
As a stand-alone company, Boca Raton, Fla.-based ADT North America will have annual revenue of roughly $3 billion and 16,000. Current president of Tyco’s security solutions segment, Naren Gursahaney will serve as ADT’s CEO, while Breen will serve as a consultant.
The flow control business, which sells valves and controls for the energy, mining and water markets, will have annual revenue of roughly $4 billion and roughly 15,000 employees. The segment’s current president, Patrick Decker, will become the new company’s CEO.
Tyco will combine its commercial security business and its fire protection business into one standalone fire and security company, Breen said.
“These businesses offer complimentary products and services to similar customers,” he explained. “Being under one management team will allow them to leverage expertise in key verticals, such as retail, government, institutions and energy, to deliver value-added differentiated solutions to customers.”
The current president of Tyco’s fire protection segment, George Oliver, will serve as the combined business’ new CEO. Based in Switzerland, the commercial fire and security company will have annual revenue of $10 billion and 69,000 employees.
With recent rumors that Schneider Electric and United Technologies Corp. (UTC) would acquire Tyco, analysts wondered if the company would weigh offers if other businesses were to bid for a piece of Tyco.
“If anyone approaches us about a piece of the company, obviously our board would have to take that under advisement,” Breen said. “Our plan is to get these out there on their own and let them play in their industries.”
Is there a chance that one of the new companies could be acquired immediately after the split?
“That could happen,” Breen replied. “But again, it’s not our plan.”
The company expects to complete the split within a year, and estimated refinancing and other costs at $700 million.