Johnson Controls & Tyco Announce Merger Deal

(RTTNews) - Johnson Controls (JCI) and Tyco (TYC) announced they have entered into a definitive merger agreement under which Johnson Controls will combine with Tyco. Johnson Controls shareholders will own approximately 56 percent of the equity of the combined company and receive aggregate cash consideration of approximately $3.9 billion. Current Tyco shareholders will own approximately 44 percent of the equity of the combined company. Tyco has secured a committed $4.0 billion bank facility to finance the cash consideration.

Immediately prior to the merger, Tyco will effect a reverse stock split so that Tyco shareholders will receive a fixed exchange ratio of 0.9550 shares for each of their existing Tyco shares. Johnson Controls shareholders may elect to receive either one share of the combined company for each of their Johnson Controls shares or cash equal to $34.88 per share.

Alex Molinaroli will be the chairman and CEO of the combined company. George Oliver will serve as president and chief operating officer. Molinaroli will serve as chairman and CEO for a term of 18 months after the closing. At that time, Oliver will become CEO and Molinaroli will become executive chair for one year, after which Oliver will become chairman and CEO. Separately, Johnson Controls said its adjusted earnings per share for the first fiscal quarter is expected to be $0.82, compared with guidance of $0.80 - $0.83. Tyco's earnings per share before special items is expected to be $0.42 versus guidance of $0.40.