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Johnson Controls and Tyco: 2 Companies to Merge
Milwaukee, Wis., and Cork, Ireland — PRNewswire — Jan. 25, 2016 — Johnson Controls and Tyco announced that they have entered into a definitive merger agreement under which Johnson Controls, a global multi-industrial company, will combine with Tyco, a global fire and security provider, to create the leader in building products and technology, integrated solutions, and energy storage.
Under terms of the agreement, unanimously approved by both companies' boards of directors, Johnson Controls shareholders will own about 56 percent of the equity of the combined company and receive aggregate cash consideration of about $3.9 billion. Current Tyco shareholders will own about 44 percent of the equity of the combined company.
"The proposed combination of Johnson Controls and Tyco represents the next phase of our transformation to become a leading global multi-industrial company," said Alex Molinaroli, chairman and chief executive officer, Johnson Controls. "With its world-class fire and security businesses, Tyco aligns with and enhances the Johnson Controls buildings platform and further positions all of our businesses for global growth. Through this transaction, we will also expand our ability to further invest globally, develop new innovative solutions for customers, and return capital to shareholders."
"The combination of Tyco and Johnson Controls is a highly strategic, value-enhancing step that brings together the unique strengths of two great companies to deliver best-in-class building technologies and services to customers around the world," said George R. Oliver, chief executive officer, Tyco. "We believe this transaction will allow us to better capture opportunities created by increased connectivity in homes, buildings, and cities. Joining forces with Johnson Controls pairs our leading established businesses with robust innovation pipelines and extensive global footprints to deliver greater value to customers, shareholders, and employees of both companies."
Under the terms of the proposed transaction, the businesses of Johnson Controls and Tyco will be combined under Tyco International plc, which will be renamed "Johnson Controls plc." The companies expect that shares of the combined company will be listed on the New York Stock Exchange and trade under the "JCI" ticker. Upon the closing of the transaction, the combined company is expected to maintain Tyco's Irish legal domicile and global headquarters in Cork, Ireland. The primary operational headquarters in North America for the combined company will be in Milwaukee, where Johnson Controls has been based.
The combined company brings together product, technology, and service capabilities across controls, fire, security, HVAC, power solutions, and energy storage, to serve various end-markets including large institutions, commercial buildings, retail, industrial, small business, and residential.
The combination of the Tyco and Johnson Controls buildings platforms creates immediate opportunities for near-term growth through cross-selling, complementary branch and channel networks, and expanded global reach for established businesses.
The new company will also benefit by combining innovation capabilities and pipelines involving new products, advanced solutions for smart buildings and cities, value-added services driven by advanced data and analytics, connectivity between buildings, and energy storage through infrastructure integration.
As a result, the new company will be able to better partner with its customers to help improve their overall performance and operations, enhancing the experience for their own customers in areas such as comfort, safety and accessibility. In addition, the combined company will have one of the largest energy-storage platforms with capabilities including traditional lead acid as well as advanced lithium ion battery technology, serving the global energy storage market.
Johnson Controls is undergoing a strategic transformation to become a top-quartile multi-industrial company with leadership in attractive spaces connected to core growth platforms in buildings and energy storage. This focus has resulted in significant portfolio changes over the past few years including the divestiture of its automotive electronics and interiors and global workplace solutions businesses, as well as the acquisition of air distribution technologies and the formation of a Johnson Controls-Hitachi joint venture. The company announced in July 2015 that it is planning to spin off Adient at the beginning of fiscal year 2017.
Tyco has transformed from a diversified holding company to a streamlined operating company with a focused portfolio in fire and security that will complement Johnson Controls' buildings platform. The company's core strengths include security and fire systems integration and commercial security monitoring, as well as fire, security. and life-safety products.