Tyco to split in three, again

SCHAFFHAUSEN, Switzerland—Tyco International plans to split into three independent, publicly traded companies, according to a plan unanimously approved by the board of directors and announced this morning.

The new companies will be:� ADT North America residential security business; Tyco Fire and Security; and, Flow Control.

This is the latest in a series of spin offs and splits of the Tyco conglomerate that was assembled by former Tyco CEO, Dennis Koslowski, in the 1990s.� Current Tyco International CEO�Ed Breen and the Tyco board began its big spin offs back in 2006, when the company divested its health-care and electronics divisions.

In a Sept. 19 prepared statement, Breen said: "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.”

During a media interview on Sept. 20, ADT Commercial president John Kenning noted that ADT split its resi and commercial business in May of 2010. "The difference between residential security today and what we [at ADT Commerical] do are vastly different in terms of sales, implementation [and service]. This is taking it one step further and separating into different companies," he said.

ADT residential will continue to be headed by John Koch. Tyco Fire and Security will be headed by George Oliver, who has been with Tyco since 2002. Kenning's commerical business, Sensormatic and Tyco Security Products will report to Oliver. The residential business will keep the ADT brand, but the commercial fire and security business will lose that brand.

Imperial Capital's Jeff Kessler told Security Systems News, during an interview on the ASIS�show floor, that the separation wlll give the "commercial and industrial business a chance to have a closer and more symbiotic relationship with SimplexGrinnell (its fire business)." Better integrating fire, security and building control systems can "provide tremendous data, that can be understood and used by the client," he said. "That can result in much stickier large enterprise client, and hence, better margins."

Tyco said it will “issue tax-free stock dividends of the ADT and flow control businesses to Tyco shareholders, after which Tyco shareholders will own 100 percent of the equity in each of the three publicly traded companies.”

The sale is expected to take one year to complete and is needs shareholder approval. The plan now is for Breen to “become non-executive chairman of the commercial fire and security company, a director of the flow control company, and a consultant to the ADT North America residential company. In addition, current Tyco directors are expected to serve on the boards of each of the three companies, including the roles of non-executive chairman of the flow control company and the ADT North America residential company.”

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