PEMBROKE, Bermuda – Acquisitive conglomerate Tyco International Ltd. on Tuesday said it plans to unlock tens of billions of dollars in shareholder value by separating into four independent, publicly traded companies.
Tyco -- which has seen its shares battered by rumors and questions over whether its growth is sustainable -- said its healthcare, fire protection and flow control and financial services businesses would be taken public through initial public offerings. Tyco's security and electronics business would be combined as a fourth independent, publicly traded company.
Tyco plastics, which makes plastic film, would be sold, Tyco said.
Tyco said it expects to complete the first of these IPOs -- of Tyco Capital -- in the second quarter of calendar 2002 and to complete all of the planned transactions by the end of calendar 2002. Each IPO, distribution or sale of a business would be subject to customary approvals.
No tax approvals are required for these transactions. The distributions to shareholders are expected to be treated as returns of capital, which minimize the tax consequences to most shareholders. Each company will remain based in Bermuda, Tyco said.
Using proceeds from the IPOs and the sale of the plastics business, Tyco said it expects it would eliminate at least $11 billion of debt.
``This is a bold, shareholder-value driven plan that we believe will create extraordinary near- and long-term benefits for Tyco's shareholders and bondholders, as well as for our employees and customers,'' Tyco Chairman Dennis Kozlowski said in a statement. ``Over the past decade, Tyco's share price has increased ten-fold as we have used Tyco's size, access to capital and operating philosophy to build world-class healthcare, electronics, telecommunications, security, fire protection, flow control, and financial services businesses.
``These businesses have now developed to a size and stage where they can thrive on their own and perhaps be even more agile than Tyco,'' Kozlowski said. ``The plan we are announcing today is the logical extension of the same value creation strategy we have successfully pursued for nearly a decade.''