Tyco International has announced a plan to unlock tens of billions of dollars of shareholder value by separating Tyco into four independent, publicly traded companies: Security and Electronics; Healthcare; Fire Protection and Flow Control; and Financial Services.
Tyco believes these actions will lead to substantially greater total shareholder value by creating independent companies that will be more appropriately valued by the market.
Under the plan, unanimously approved by the company’s board of directors, Tyco’s healthcare; fire protection & flow control; and financial services businesses will be taken public through initial public offerings (IPO) and then distributed to Tyco shareholders.
Tyco’s security & electronics businesses will be combined as a fourth independent, publicly traded company. Tyco Plastics, one of the United States’ largest manufacturers of plastic film and other plastic products, will be sold.
Tyco said it expects to complete the first of these IPOs – Tyco Capital – in the second quarter of 2002 and to complete all of the planned transactions by the end of 2002. Each IPO, distribution or sale of a business will be subject to customary approvals.
In addition to creating substantial value for Tyco shareholders, these transactions will reportedly have a positive effect on Tyco’s balance sheet. Using proceeds from the IPOs and the sale of its Plastics business, Tyco expects to eliminate at least $11 billion of debt.