The reorganization of Tyco International into three separate publicly traded companies is not expected to affect Tyco’s ADT business immediately.
“The recent spin-off of Tyco International’s electronics and health care businesses will not have a substantial impact on ADT,” declared Paul Fitzhenry, Tyco’s vice president of corporate communications. “With the completion of the spin-off at the end of June, the remaining Tyco International today consists of a smaller and more focused portfolio of businesses, within which ADT Worldwide accounts for the largest business segment, about 40 percent of Tyco’s $18 billion in annual revenues.”
On June 29, for every four common shares of Tyco International stock, one share of Covidien Ltd., the new name for Tyco’s health care business, and one share of Tyco Electronics were distributed to stockholders. Then every four shares of Tyco Electronics were converted to one share in a one-to-four reverse stock split
Edward Breen is continuing as chairman and CEO of Tyco, which includes the fire, security and alarm businesses, one of which is ADT.
Breen told CNBC he wants to expand ADT’s business in North America, where its residential security business holds a 15 percent market share, and internationally. He also revealed that the company is open to additional acquisitions in the commercial security business.
Among the operational leadership changes announced is the appointment of Naren Gursahaney as president of ADT Worldwide, including ADT North America and all of Tyco’s fire and security operations outside North America.
Gursahaney joined Tyco International in 2003 and led Tyco’s worldwide operational excellence efforts before being named president of Tyco Flow Control in January 2005. He was named president of Tyco Engineered Products and Services in January 2006. Before joining Tyco, Gursahaney spent 10 years at General Electric.
In a conference call June 5, Jeffrey Kessler and Shannon O’Callaghan, research analysts at Lehman Brothers, New York, pointed out that ADT’s attrition has been declining and number of accounts growing.
“So while it hasn’t looked that pretty in the financial statements, a lot of progress still has been made, in our view, over the last several years, and we think ADT is at a key positive turning point,” summarized O’Callaghan.
“We expect the attrition rate, which has gone from 16 percent in the first quarter of 2004 down to 13 percent in the second quarter of 2007, to continue to decline, and we think revenue will accelerate, and there is opportunity for margin expansion,” she added.
“As for ADT, I think there would be significant interest in that being a stand-alone, either in a public or private respect,” O’Callaghan declared.
Tyco Spins off Electronics and Health Care
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