Tyco International secures $4 billion to combine with Johnson Controls

By Lisa Kerner

Charlotte, N.C., Jan. 25 – Tyco International plc secured a committed $4 billion bank facility from Citi to finance the cash consideration of its combination with Johnson Controls.

The companies held a conference call on Monday to discuss the proposed transaction.

Tyco has $2 billion of debt and Johnson has about $7 billion of debt, said Tyco chief financial officer Robert Olson on the call.

Net debt post transaction will be in the $10 billion to $11 billion range. Olson said he is comfortable with the leverage position.

Both Johnson Controls and Tyco shareholders will receive shares of Adient (Johnson Controls Automotive Experience) which will be distributed after the merger.

Pro forma for the transaction, and following the Adient separation, Johnson Controls is expected to have roughly $32 billion of revenue in fiscal year 2016 and $4.5 billion of EBITDA before synergies.

The combined company expects to deliver at least $500 million in operational synergies over the first three years, according to a news release.

Transaction details

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, subject to proration. The shareholders will own about 56% of the equity of the combined company and receive total cash consideration of about $3.9 billion.

Tyco shareholders will own about 44% of the equity of the combined company. The exchange ratio represents a 13% premium to Tyco shareholders.

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.” It is expected that the shares of the combined company will be listed on the New York Stock Exchange and trade under the “JCI” ticker.

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 release stated.

Tyco International plc, a Cork, Ireland-based security systems company. Johnson Controls is a diversified technology and industrial company based in Milwaukee.

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