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September 19, 2011 5:48 PM

Simpson Thacher Advises on Tyco Breakup

Posted by Dana Olsen

Tyco International announced plans Monday to break itself into three publicly traded companies, a move that the conglomerate says will allow each business to more easily merge with or acquire other companies.

Tyco said it plans to spin off its ADT residential security business and its industrial pipeline and valves division into new companies. The surviving company would house Tyco's commercial security business. Tyco shareholders would receive tax-free stock dividends of the ADT and the pipeline businesses, giving investors ownership of all three companies.

Tyco said it expects to spend a total of about $700 million to separate the two companies and to refinance debt. The transaction, which is still subject to shareholder approval, would be completed in the next 12 months, the company said.

The spin-off is meant to allow each new company to better expand through acquisitions and internal growth, Tyco chairman and CEO Ed Breen said in the company's statement.

The Wall Street Journal reports that Tyco's breakup likely will draw interest from rivals looking to acquire parts of the business before the planned spin-off. Breen said he doesn't plan to sell the newly separate businesses but will listen to offers, the Journal reports. 

Simpson Thacher & Bartlett, which has advised Tyco on previous M&A transactions, is representing the company on the split. Corporate partner Alan Klein is leading the firm's team on the matter.

Past matters on which Simpson Thacher has advised Tyco include its acquisition of Broadview Security (now known as Brinks Home Security Holdings) for $2 billion last year. The firm also worked for Tyco again near the end of 2010 when the conglomerate sold a 51 percent share of its electrical and metal products business to buyout firm Clayton, Dubilier & Rice.

Tyco's general counsel is Judith Reinsdorf, who took the job four years ago when her predecessor, William Lytton, became a partner at Dechert.  

The separation marks Tyco's latest transformation. The conglomerate spun off its health care business, Covidien, and electronics group (now known as TE Connectivity) both in 2007.

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