On Wednesday, Tyco International Ltd. (NYSE:TYC) agreed in an all-stock transaction merger with Pentair for its flow control unit.
According to an article in The New York Times by MICHAEL J. DE LA MERCED, Tyco will continue with its breakup plan and make its flow business as an standalone entity. The deal also has Pentair immediately merging with the new independent company.
Corsair Capital was down by about 3.5% net for the third quarter, bringing its year-to-date return to 13.3% net. Corsair Select lost 9.1% net, bringing its year-to-date performance to 15.3% net. The HFRI – EHI was down 0.5% for the third quarter but is up 11.5% year to date, while the S&P 500 returned 0.6% Read More
The deal has Tyco shareholders receiving 52.5 percent of the company and the balance to Pentair investors, along with $275 million debt from the flow business.
Tyco Flow Control will have a $4.9 billion value as compared to Pentair, Inc. (NYSE:PNR)‘s $4 billion market value.
The new company will have the Pentair name and its chief executive, Randall J. Hogan, will lead it. Hogan said of the transaction, “This is a highly compelling, transformational transaction, bringing together two great companies to create substantial value for shareholders and enhanced growth prospects.”
The Pentair board will be intact but Tyco will add two directors.
Pentair will keep its Switzerland headquarter while Minnesota will house its American offices. The new company should have approximately 30,000 employees, divided evenly between Pentair and Tyco.
Tyco had been trying to break up the company for six months after announcing a plan to divest into three companies. It had considered the entities being independently acquired, with the flow business seen as particularly attractive with its market from valves and pumps, according to The New York Times.
In addition, Tyco Flow saw $4 billion in annual revenues.
Investors responded positively in pre-market to the news with Pentair rising to $48 (20 percent) while Tyco shares increased to $55.20 (3.1 percent).
The deal is expected to be completed in September. Tyco is still working on breaking off two divisions: ADT home alarm and commercial fire and security.