Tyco Moves Ahead With Breakup Plan

Tyco International said on Thursday its board has approved its separation into three publicly traded companies. Tyco shareholders will receive one share of its new healthcare company, Covidien (ticker COV), and one share of Tyco Electronics (ticker TEL) for every four of their shares in the parent company. The board also approved a 1-for-4 reverse split of shares in the parent company. Tyco says the separation, which may cost up to $1.6 billion, will allow the separate companies to grow better by setting their own strategies for acquisitions and use of resources. Shareholders as of June 18 will participate in the June 29 split. CEO Ed Breen will continue running the remaining company, including ADT security, fire equipment and services, and industrial valves. Rich Meelia will head Covidien, and Thomas Lynch will be CEO of Tyco Electronics. Tyco filed with the SEC Thursday to withdraw debt offerings the three entities registered for, saying there was no need for the issues since it has "debt financing in place to allow us to complete the spin-offs of Covidien and Electronics." After the break-up, Tyco has said it will explore the possible sale of its infrastructure services business, whose 2006 sales totaled $1.2 billion. We are now in the final stages of completing this complex transaction which will provide these businesses with the focus and flexibility to achieve their long-term growth potential," said CEO Breen.

Sources: Press release, Bloomberg, Reuters
Commentary: Pre-Spinoff Tyco Is A Buy • Tyco: Breaking Up and Taking Off • Looking Beyond the Scandal at Tyco
Stocks/ETFs to watch: Tyco International Ltd. (TYC), Covidien (COV), Tyco Electronics (TEL)

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