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Tyco Closes Sale of Atkore International

Zacks Equity Research

Tyco International Ltd. (TYC) completed the sale of its residual interest in its former electrical and metal products business, Atkore International, in a cash deal valued at around $250 million.

Tyco, a security and protection services provider, sold 51% stake in Atkore earlier in Nov 2010 to the private equity firm, Clayton Dubilier & Rice, LLC (CD&R). The consideration for the majority stake amounted to approximately $720 million in cash. Following the sale, Atkore is operating as an independent, stand-alone entity.

Tyco is increasing its focus on its core businesses of safety equipment and fire-suppression systems for commercial buildings. In 2012, Tyco spun off its North American security business to create ADT Corp. It also split off its pipe-and-valve business, and then merged it with Pentair Inc.

Last month, Tyco entered into an agreement to sell its South Korean security business, ADT Korea, to the asset management company, The Carlyle Group LP (CG), for $1.93 billion in cash. Tyco’s decision to divest its profitable ADT Korea business was fuelled by its need to fund strategic acquisitions. The divestiture was part of an ongoing 3-year strategy, through which Tyco hopes to achieve a 15% earnings per share CAGR in fiscal 2015.

Going forward, Tyco will continue to capitalize on organic and inorganic growth opportunities, supported by its strong balance sheet.

Tyco presently sports a Zacks Rank #3 (Hold). Other stocks in the diversified operations industry that warrant a look include Federal Signal Corp. (FSS) and Sumitomo Corporation (SSUMY), both of which carry a Zacks Rank #1 (Strong Buy).

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