Johnson Controls, Tyco to merge

Johnson Controls announced Monday that the company will merge with fire and security provider Tyco.

Under the deal, Johnson Control’s shareholders would own just 56 percent of the combined company.

However, the new entity will function from Milwaukee, where Johnson Controls Inc (JCI.N) has its North America headquarters.

First 18 months the companies will be run by Molinaroli who will be the chairman and CEO while the deal will be completed. DuPont CEO Edward Breen was Tyco’s CEO when it did much of splitting, and remains its chairman.

Oliver said on a conference call that the 30 percent is based on potential gains such as “at least $650 million in synergies over the next few years”.

Shares down “The move would be consistent with Johnson Controls’ strategy of transforming from an auto supplier into a multi- industry leader”, UBS analyst Colin Langan said in a client note. The company had revenue of $8.75 billion for the quarter, compared to analysts’ expectations of $8.79 billion.

Centerview Partners and Barclays were financial advisers to Johnson Controls, while Lazard and Goldman Sachs advised Tyco.

Other multibillion-dollar so-called tax inversions have attracted criticism from Washington lawmakers.

The combined company, to be known as Johnson Controls plc, is expected to shed $500 million in costs over the first three years of the deal.

Tyco International plc (NYSE:TYC) traded up 11.64% during midday trading on Thursday, hitting $34.15. KBC Group now owns 67,630 shares of the company’s stock valued at $2,797,000 after buying an additional 1,952 shares in the last quarter. But that is in part because they are being paid in cash and not just stock, said Robert Willens, a New York-based tax expert. Tyco, a former USA conglomerate that divided into multiple companies after former Chief Executive Officer Dennis Kozlowski was forced out in 2002 and later went to prison, has been domiciled in Ireland since 2014, with prior stops in Switzerland and Bermuda.

Tyco is pure-play fire protection and security company.

“Tyco aligns with and enhances the Johnson Controls buildings platform and further positions all of our businesses for global growth”, Molinaroli said in a press release.

“By relocating the combined company to Ireland – which would theoretically be possible after a merger – the company would lower its tax expenses dramatically”.

“The world is moving to a more connected future”, Oliver said. Both Johnson Controls and Tyco shareholders will also receive shares of Adient (Johnson Controls Automotive Experience) which is being spun off at the beginning of fiscal 2017. Johnson Controls has a stock-market capitalization of about $23 billion.