TRENTON, N.J. - Tyco International Ltd. announced on Friday that it would be splitting into three public companies. The electronics and healthcare segments would be separated from its other businesses, the company said.
Tyco is yet to recover from the accounting scandals, which resulted in a prison term for its former CEO L. Dennis Kozlowski. The company also issued a profits warning saying that the first quarter and the full-year earnings for 2006 are set to be lower than expected. The West Windsor, N.J-based firm said that the decision to separate its different operation was taken after a strategic review. Tyco Chairman and Chief Executive Ed Breen said that it was a logical step, "We believe that separation is a logical next step in Tyco's evolution."
He added that Tyco had made considerable progress over the last three years, "We have a strong and independent board, a rebuilt management team, outstanding corporate governance rankings and an operational culture that puts growth and operating excellence at the top of the management agenda." Tyco had already considered breaking up its various interests, which include security and fire-protection services, four years ago, but had put it off. This move is seen as a bid to boost its stock which tumbled by $3.19 or 10.5 percent, to $27.12 at close on the New York Stock Exchange.
The move to separate the companies will be completed in early 2007 and will cost $1 billion. Tyco will provide tax-free stock dividends to shareholders in order to complete this move. The shareholders will own dividend-producing stock in all three entities. Additionally, all three companies will have an independent board of directors, with full authority to take any decisions on acquisitions or sell offs, Breen said.
Posted
on : Sun, 15 Jan 2006 02:15 GMT | Business News
By : Pippa Fielding
|
