Tyco International Ltd.’s electronics business unit is set to be spun off into its own company as part of a newly announced plan by the international conglomerate to split itself into three companies.

The other two businesses would encompass Tyco’s Healthcare organizations and its Fire and Security.

All three of the new companies would be publicly traded, Tyco said, in a statement. The split, already approved by the company’s board, would offer tax-free stock dividends to shareholders.

“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,” said Ed Breen, chairman and CEO, in a statement.  “Healthcare, Electronics and TFS/TEPS will be able to move faster and more aggressively -- and ultimately create more value for our shareholders -- by pursuing their own growth strategies as independent companies.”

Tyco Electronics’ business offers a wide range of electronic components, including connectors, switches, relays, circuit protection devices, touch screens, magnetics, resistors, wire and cable, as well as fiber-optic and wireless components and systems.  Electronics has 88,000 employees worldwide and will be a $12 billion stand-alone enterprise.

“Tyco Electronics will be positioned to move quickly and strategically as competition requires, and will be better able to participate in ongoing electronics industry consolidation,” the company said, in a statement. 

Tom Lynch will serve as the new electronic company’s CEO. He currently sits in the role of president of Tyco’s Engineered Products & Services segment.  Dr. Juergen Gromer, who has led Tyco Electronics since 1999, will continue as president of the new company, and will also assume additional responsibilities as vice chairman.  Jacki Heisse will continue to serve as the company’s CFO.

Tyco anticipates one time transaction costs for the three way split of $1 billion total, primarily for tax and debt refinancing. Under the proposed transition, each company is expected to remain incorporated in Bermuda, where its parent currently has its headquarters.  The transaction is not expected to be completed until 2007.

As for its current financials, Tyco said that it expects earnings per share from continuing operations to be about 38 cents per share compared it previously provided guidance of 40 cents to 42 cents per share for Q1.

Organic growth for the Electronics and Engineered Products and Services division is expected to be 7 to 8 percent.

For the full year 2006, the company is now expecting EPS from continuing operations excluding special items to be in the range of $1.85 to $1.92 per share.

The company will release its full first quarter results on Feb. 2, 2006.

By: DocMemory
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