Tyco to split into three companies

Sept. 19, 2011- The board of directors of Tyco International has unanimously approved a plan to separate itself into three separate companies, all of which will be publicly traded.

The company is dividing into a residential/small business security business (driven by ADT North America), a commercial fire and security business, and a flow control products business.

Tyco CEO Ed Breen said the split allows each unit to grow following its own direction.

“Creating three independent, public companies is the next logical step for Tyco,” said Breen. “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 than they would under Tyco's current corporate structure.”

From a stockholder level, the company said it “intends to accomplish the separation by issuing 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.” Tyco said it expect the transaction would be finished in a year or less.

Once the split occurs, Breen will stay on with the commercial fire and security business in a non-executive chairman role, will serve as a director on the board of the flow control company, and will be a consultant to the ADT residential company.

According to Bob Tucker, ADT's spokesperson, the commercial fire and security business will eventually drop the ADT name after the transaction closes.

A former ADT insider said that part of the reason for the ADT brand would continue to be used solely by the residential side of the business was because the commercial fire and security business was said to be for sale.

“I had good insight that they were going to try to sell themselves off,” said the former insider. “But this seems to be the model, to break into these parts. Maybe they can sell the parts this way.”

The source said that UTC and JCI were some of the companies rumored to be considering making a purchase of the former ADT commercial business, but admitted it was too early to know what was purely rumor and what was actual interest.