Tyco International Ltd. today announced that its board of directors has approved a plan to separate the company's current portfolio of diverse businesses into three separate, publicly traded companies. The three companies will be Tyco Healthcare, Tyco Electronics and a combination of Tyco Fire & Security and Engineered Products & Services (TFS/TEPS).
According to a statement by the company, Tyco intends to accomplish the separation through tax-free stock dividends to Tyco shareholders, after which they will own 100 percent of the equity in three publicly traded companies. Each company will have its own independent board of directors and corporate governance standards. Tyco said it expects to complete the transactions during the first quarter of 2007.
"In the past several years, Tyco has come a long way," Tyco Chairman and Chief Executive Officer Ed Breen said in a prepared statement. "Our balance sheet and cash flows are strong and many legacy financial and legal issues have been resolved. We are fortunate to have a great mix of businesses with market-leading positions. After a thorough review of strategic options with our board of directors, we have determined that separating into three independent companies is the best approach to enable these businesses to achieve their full potential. Healthcare, Electronics and TFS/TEPS will be able to move faster and more aggressively -- and ultimately create more value for our shareholders -- by pursuing their own growth strategies as independent companies."
Tyco's board of directors and senior leadership have evaluated other strategic alternatives, including continuing the company's current operating strategy, selling select businesses, and separating only one of the businesses. In the end, the company decided that separating into three businesses is the best option for sustained growth and value creation.