Reuters: Deals: Tyco to combine flow control business with Pentair

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Tyco to combine flow control business with Pentair Mar 28th 2012, 14:05 Wed Mar 28, 2012 10:05am EDT (Reuters) - Tyco International (TYC.N) said it will spin off and merge its flow control business with Pentair Inc (PNR.N) to create a global flow and filtration products major with $7.7 billion in annual revenue. The new company, to be headed by Pentair CEO Randall Hogan, will be majority owned by Tyco shareholders and will be a leading maker of valves and controls, water and fluid solutions and equipment protection products. The all-stock deal values Tyco's flow business -- which sells valves and thermal controls for energy and other markets -- at $4.6 billion, based on Pentair's Tuesday close, the companies said in a statement. Last year, Tyco announced plans to split into three publicly traded companies, in a move seen as the final unwinding of an industrial giant that for a decade has worked to repair its image after a fraud scandal. Tyco had said it would also consider sales of the three units -- ADT North America residential security, flow-control products and services, and its fire and commercial security business. The new company -- to be called Pentair and headquartered in Switzerland -- will have $7.7 billion in 2012 revenue and $5 in earnings per share in 2015. "The new Pentair will be well positioned to benefit from the increased demands on energy, water, infrastructure and industrial process resulting from the growing population and wealth of developing economies," Pentair's Hogan said in a statement. Under the deal, structured as a Reverse Morris Trust transaction to save on tax, Tyco will complete the spin-off of its flow business to its shareholders and then immediately merge Pentair into a subsidiary of Tyco Flow. Tyco shareholders will own about 52.5 percent of the new company while Pentair shareholders will hold 47.5 percent. The deal is expected to be completed in September, following regulatory and shareholder approvals. Tyco also plans to complete its separation plan by then. Deutsche Bank Securities is acting as financial adviser to Pentair, while Goldman is advising Tyco. Tyco's shares have risen 30 percent since the company announced plans to split into three companies. They closed at $53.53 on Tuesday on the New York Stock Exchange. Pentair shares rose 11 percent in early trade on Wednesday. They had closed at $40.26 on Tuesday. (Reporting by A. Ananthalakshmi in Bangalore; Editing by Unnikrishnan Nair, Sriraj Kalluvila) Link this Share this Digg this Email Reprints

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