Tyco International Ltd. (TYC) on Friday unveiled plans to split into three separate, publicly traded companies early next year, marking a break-up of the sprawling $61 billion conglomerate.

Tyco, which also warned of an earnings shortfall, said in a statement that its board had approved a plan to break up the company through tax-free stock dividends to its shareholders, who would then own 100 percent of the equity in the companies. Shares fell 8.6 percent in premarket trading.

One company will be Tyco Healthcare, the second will be Tyco Electronics, and the third will be a combination of Tyco Fire & Security and Engineered Products & Services.

Each company will have its own independent board once the split is completed, which will likely be during the first quarter of 2007, Tyco said.

"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," Tyco Chairman and Chief Executive Ed Breen said in a statement.

The decision by Breen and the board is a sharp reversal of years of acquisitions by Tyco under the leadership of former CEO Dennis Kozlowski.

The board looked at other options, including continuing as one company, sales of select businesses and separation of only one of the businesses before concluding the three-way split was the best option, Tyco said.

A previous plan to break up the company that was floated by Kozlowski four years ago was eventually shelved. Since then, Kozlowski has been tried and convicted for his role in an accounting scandal at Tyco.

Under the current plan, the company's existing debt is expected to be allocated among the three companies or refinanced, Tyco said.

One-time transaction costs are expected to total about $1 billion, mostly made up of tax and debt refinancing, and all three new companies are expected to remain incorporated in Bermuda.

The three entities together are initially expected to pay a dividend that is equal to the current Tyco dividend. Until the planned transactions are completed, Tyco said it expects to pay its current quarterly dividend of 10 cents a share.

Meanwhile, Tyco also warned that weakness in the commercial security and worldwide fire services businesses, and revenue shortfalls in the imaging and respiratory businesses would leave its first quarter 2006 earnings below its earlier forecasts.

Tyco said its first quarter earnings per share from continuing operations -- excluding special items -- would likely be about 38 cents, down from its previous forecast of 40 to 42 cents.

The company, which is scheduled to report first-quarter results on February 2, said it expects growth in its ongoing businesses of about 4 percent in the quarter.

For the full year 2006, Tyco expects earnings from continuing operations excluding special items will be in the range of $1.85 to $1.92 per share.

Analysts polled by Reuters Estimates had on average expected Tyco to earn 42 cents a share in the first quarter and $2.01 a share for the full year.

Tyco shares fell $2.34 to $27.97 on the New York Stock Exchange.