Ingersoll Rand names planned $2 billion spinoff: Allegion

The name of the new publicly traded company—expected to be spun off later this year—reflects the allegiance between Ingersoll Rand and its customers
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Monday, June 17, 2013

SWORDS, Ireland—Ingersoll Rand, which previously said it planned to spin off its security products business at some point this year, today announced that Allegion will be the name of the new company and that it will have revenues of $2.05 billion.

 “We’re excited about the name,” Misty Zelent, a spokeswoman for Ingersoll Rand, based here, told Security Systems News. “It really represents the collaborative long-term relationships we have with customers and the team of experts we have around the world for this new company.”

Ingersoll Rand announced the name in a filing today with the U.S. Securities and Exchange Commission.

Allegion will spin off before the end of this year, Ingersoll Rand said in a news release. Zelent said she had no further details on when the spinoff would occur, but that when it does take place, “Allegion will be a stand-alone public company separate from Ingersoll Rand.”

Allegion expects to list its shares on the New York Stock Exchange and use the ticker symbol ALLE.

It will be an Irish company, with its North American corporate office in Carmel, Ind., according to the release. It will employ about 7,600 people in 35 countries, including 20 production and distribution facilities around the world.

Ingersoll Rand said the CEO of Allegion would be named later this year.
In April, Ingersoll Rand announced that Patrick Shannon would serve as senior VP and CFO of the new security spinoff and Barbara Santoro would serve as SVP and general counsel.

Five directors will serve on Allegion’s board with the new CEO, according to the news release. The release said the directors are David B. Burritt, former VP and CFO of Caterpillar Inc., who will chair the Audit Committee; Michael J. Chesser, former chairman and CEO of Great Plains Energy Inc., who will be chairman of the Compensation Committee; Carla Cico, former CEO of Rivoli SPA and Ambrosetti Consulting; Kirk S. Hachigian, former chairman, president and CEO of Cooper Industries, who will be the board’s lead director or non-executive chairman; and Luc Oursel, chairman, president and CEO of Areva SA.

In a separate announcement on June 17, Ingersoll Rand said it is selling senior notes in a private offering to refinance debt and help pay expenses for the new business.

The company said in a news release that it plans to sell $1.55 billion in debt. Ingersoll Rand is offering the bonds “at bargain prices," according to a news report from Reuters.

Ingersoll Rand said in the release that the company planned to use the proceeds from the notes in three ways: to redeem 6 percent senior notes with an aggregate principal of $600 million due this year; to redeem $655 million in 9.5 percent senior notes due in 2014; “and/or to fund expenses related to our previously announced spinoff of our commercial and residential security businesses.”

Reuters noted that “the spinoff removes some of the legacy company's best high-margin businesses, which account for about 14 percent of revenue.” It said the original Ingersoll Rand would focus primarily on commercial and residential heating, ventilation and air-conditioning systems manufacturing. The remaining IR business will total about $12 billion.

The spinoff company will include the well-known Schlage brand of locks and other electronic and biometric access-control products. Other brands in its portfolio include LCN, Von Duprin, Interflex, CISA, Briton, Bricard, BOCOM Systems, Dexter, Kryptonite, Falcon and Fusion Hardware Group.

The decision to spin off the security business was prompted by activist shareholder Nelson Peltz, whose Trian Fund Management owns 7.3 percent of IR stock and is a member of the company’s board of directors.

In a prepared statement, Ingersoll Rand Chairman and CEO Michael W. Lamach said, “Allegion further conveys the enduring legacy of our innovative security products and solutions, which people depend on to work seamlessly at critical moments, and function effortlessly in daily use. It’s on that tradition that Allegion pledges its promising future as a leader in the global safety and security industry.”

SSN continues to report on this story.