Tyco outlines more post-spin-off plans

Thursday, June 21, 2007

HAMILTON, Bermuda--Tyco International, in a conference call held Tuesday, outlined more plans for operations following the spin-off of its electronics (Tyco Electronics) and health care business (to be known as Covidien; search "Tyco announces reorganization" at www.securitysystemsnews.com for more on new organizations) at the end of June. Edward Breen, who will remain Tyco International's lead executive, told investors the company will look to increase core revenue four to six percent annually, and will divest roughly 10 percent of its current assets by the middle of 2009, representing a current value of about $2 billion.
To attain that growth, Tyco International will "focus on organic growth initiatives," Breen said. Those looking for Tyco to get back into major acquisitions following the spin-off may be disappointed. Breen mentioned only "tuck-in" buys as possibilities. However, for a company of Tyco's size, "tuck-in" could be a relative term.
As for the divesture, Breen mentioned specifically a business named Earth Tech that serves the water market, and an Asian business that builds fire trucks. He referred to them as good businesses, but not "core" businesses for Tyco International's plans going forward.
Tyco International expects to incur between $350 and $400 million in restructuring charges in 2007 and 2008 as a result of the spin-off and resultant integration of its remaining assets, which include DSC, ADT, and Bentel Security operating in the security industry. The company will continue to be traded on the New York Stock Exchange under the symbol TYC.