DIVERSIFIED manufacturer Tyco International is moving to separate its businesses into three independent publicly traded companies, becoming the latest US conglomerate to do so.
Investors cheered the move and drove the company’s shares up nine per cent in pre-market trade yesterday.
Consumer companies Kraft Foods, Ralcorp Holdings, finance-to-education conglomerate McGraw-Hill and energy giant ConocoPhillips have announced plans to split their business as conglomerates are falling out of favour with investors.
Tyco said its shareholders would own a 100 per cent stake in each of the three companies: ADT North America residential security business, flow control products and services and the fire and security business.
“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,” Tyco chief Ed Breen said.
Tyco expects the transaction to be completed in about 12 months.
It also sees one-off transaction costs of about $700m (£446.3m), mainly for debt refinancing, separation and restructuring costs.
The three entities together are initially expected to pay a dividend roughly equal in sum to Tyco’s current dividend.
The first company, ADT North America residential business, which provides security and fire alarm systems in North America to over six million residential homes and small businesses, would have an annual revenue of about $3bn and 16,000 employees.
City A.M. Reporter