Tyco shares bounce on talk of takeover

Marion Dakers
SHARES in US industrial conglomerate Tyco International received a boost yesterday after news of bid interest from Schneider Electric.

Schneider, which works with British Airways and public sector bodies on energy efficiency projects, is thought to have hired bankers to examine Tyco ahead of a possible takeover offer, although the plan is at an early stage.

France’s Schneider has made several acquisitions in recent months, with a focus on emerging markets in Russia and India, as it tries to get ahead of engineering rivals like Siemens and ABB.

But even if Schneider decides not to make an offer, analysts said the news flags up Tyco’s attractiveness and could prompt further interest.

New Jersey-based Tyco, which has operations focused on security, fire-fighting and pipelines, “could have strategic appeal to many bidders, given consolidation in fire and security markets, nascent cablecom interest in security services and the ability for Tyco’s balance sheet to support significantly higher leverage,” Deutsche Bank analyst Nigel Coe said in a research note.

Tyco shares closed up 1.6 per cent in New York trading, giving it a market capitalisation of $23bn (£14bn). Schneider’s Paris-traded shares lost 3.7 per cent to close at €117 (£103.18). Schneider has a market cap of €33bn.

A Tyco spokesperson last night said the firm “could not comment on market rumour”, while Schneider did not return calls.