TYCO BREAKS UP CONGLOMORATE INTO THREE SEPARATE COMPANIES

Jan 1, 2006 12:00 PM

Tyco International Ltd. has unveiled plans to split into three separate, publicly traded companies early next year, marking a break-up of the $61 billion conglomerate. Tyco's Fire and Security business will be merged with the company's engineering products and services division to form one of the new companies.

Tyco, which also warned of an earnings shortfall, said in a statement that its board had approved a plan to break up the company through tax-free stock dividends to its shareholders, who would then own 100 percent of the equity in the companies. One company will be Tyco Healthcare, the second will be Tyco Electronics, and the third will be a combination of Tyco Fire & Security and Engineered Products & Services.

Each company will have its own independent board once the split is completed, which will likely be during the first quarter of 2007, Tyco says.

The board looked at other options, including continuing as one company, sales of select businesses and separation of only one of the businesses before concluding the three-way split was the best option, Tyco said in a statement.

Under the current plan, the company's existing debt is expected to be allocated among the three companies or refinanced. All three new companies are expected to remain incorporated in Bermuda.

Meanwhile, Tyco also warned that weakness in the commercial security and worldwide fire services businesses, and revenue shortfalls in the imaging and respiratory businesses would leave its first quarter 2006 earnings below its earlier forecasts.

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