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Who Will Buy Out Tyco International?

Fri, 05/13/2011 - 9:34am

NEW YORK (AP) — Shares of Tyco International Ltd. rose in Friday trading after a news report said a potential buyer is speaking to private equity firms about partnering on bid for Tyco.

THE SPARK: According to the New York Post, France-based Schneider Electric has contacted buyout firms about putting together a bid that could offer $30 billion or more for Tyco, which owns ADT security and a series of other fire protection and industrial companies. That would be a 25 percent premium over the company's current market capitalization of about $24 billion.

THE BIG PICTURE: The Post report said the talks are still in the early stages and Schneider has not yet chosen a partner, but other news outlets said the company denied a deal is in the works.

Rumors about Schneider targeting Switzerland-based Tyco popped up earlier last month, and the company denied its interest. Tyco's predecessor company, a much bigger conglomerate, became infamous when its former chief executive, Dennis Kozlowski, was convicted of enriching himself with company funds in 2005. It was broken up into three companies after that public relations debacle, and the headquarters moved from Bermuda to Switzerland. Tyco International management operates out of Princeton, N.J.

CEO Ed Breen has indicated a sale is a possibility. "We always, as a management team, present to our board and talk to them about all the alternatives you can have to create long-term, sustainable shareholder value," he said last month during its second-quarter earnings conference call. "We look at every analysis."

SHARE ACTION: Tyco International shares added $1.73, or 3.5 percent, to $51.23 in afternoon trading. The stock has moved between $34.23 and $53.38 in the past 52 weeks.

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