business news Johnson Controls merges with Tyco Milwaukee, Wi (USA) and Cork, Ireland Johnson Controls and Tyco have entered into a definitive merger agreement under which Johnson Controls, a global multi-industrial company, will combine with Tyco, a global fire and security provider, to create the leader in building products and technology, integrated solutions and energy storage. The new company will be operated under the name of Johnson Controls signalling the end of the Tyco brand. Under the terms of the agreement, 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. ”The proposed combination of Johnson Controls and Tyco represents the next phase of our transformation to become a leading global multi-industrial company,” states Alex Molinaroli, chairman and chief executive officer, Johnson Controls. ”With its world-class fire and security businesses, Tyco aligns with and enhances the Johnson Controls buildings platform and further positions all of our businesses for global growth. Through this transaction, we will also expand our ability to further invest globally, develop new innovative solutions for customers and return capital to shareholders.” Unique strength George R. Oliver, CEO for,Tyco, claims that the combination of Tyco and Johnson Controls is a highly strategic, value-enhancing step. ”We believe this transaction will allow us to better capture opportunities created by increased connectivity in homes, buildings and cities. Joining forces with Johnson Controls pairs our leading established businesses with robust innovation pipelines and extensive global footprints to deliver greater value to customers, shareholders and employees of both companies.” Headquarters in Ireland The businesses of Johnson Controls and Tyco will be combined under Tyco International plc, which will be renamed ”Johnson Controls plc.” The combined company is expected to maintain Tyco’s Irish legal domicile and global headquarters in Cork, Ireland. The primary operational headquarters in North Johnson Controls and Tyco merges. The combined company is expected to maintain Tyco’s Irish legal domicile and global headquarters in Cork, Ireland. America will be in Milwaukee, where Johnson Controls has been based. $32 billion of revenue Pro forma for the transaction and separation of Adient (Johnson Controls Automotive Experience), Johnson Controls is expected to have approximately $32 billion of revenue in fiscal year 2016 and $4.5 billion of EBITDA before synergies. Adient is expected to have approximately $16.6 billion of revenue in fiscal year 2016 and $1.6 billion of EBITDA. In addition, Adient is expected to distribute between $2.5 to $3.5 billion to Johnson Controls in conjunction with the spin-off. $500 million in operational synergies The new company expects to deliver at least $500 million in operational synergies over the first three years after closing. In addi- tion, the transaction is expected to create at least $150 million in annual tax synergies. The completion of the transaction, which is expected by the end of fiscal year 2016, is subject to customary closing conditions, including regulatory approvals and approval by both Johnson Controls and Tyco shareholders. Olivier becomes COO Following closing of the transaction, the board of directors of the combined company is expected to have 11 directors, consisting of six directors from Johnson Controls and five directors from Tyco. Alex Molinaroli will be the chairman and CEO) of the combined company. George Oliver will serve as president and COO and serve as a director on the new board, with responsibility for the operating businesses and leading the integration. Further acquisitions ahead London, UK Following the Johnson Controls and Tyco International plan to merge – research specialists IHS predict that we may see more acquisitions within the security system integration market. Johnson Controls, with 130,000 employees in 150 countries, is a provider of products, solutions and services in three main areas: building efficiency, batteries and energy storage, and automotive. Tyco, with 57,000 employees, is a pure-play provider of products, solutions and services across the security and fire industry. This merger brings together the largest security system integration business, Tyco Fire & Security, under the control of a smaller security integrator, but overall larger company, Johnson Controls. Johnson Controls has already announced that it is divesting its automotive business, stating that it is working to become” a building-technology, building-automation giant”. Paul Bremner, Senior analyst, Security Services at IHS, says that this acquisition will solidify that position, bringing together Johnson Controls’ building automation products, solutions and services with Tyco’s fire safety and security products and integration business. After the automotive business is sold, the new Johnson Controls plc will get 70% of its revenue from physical products and 30% from services, according to Tyco’s CEO George Oliver. As well as the $150 million tax savings from shifting Johnson Controls headquarters to Cork, Ireland, the company expects $500 million potential savings by eliminating duplication in the new business. Johnson Controls has an existing security system integration business which IHS estimates to be the 10th largest in the world. Meanwhile, Tyco Fire & Security is estimated to be the world’s largest security integrator. The two companies would have a combined share greater than 5% of a global market worth around $62 billion. Despite this, the security integration supply base would remain highly fragmented, with the top 15 integrators accounting for only around 20% of revenues. As price, brand and channel strategy continue to gain importance, IHS analysts expect this to drive further consolidation in the security system integration market and that larger players are likely to acquire smaller companies in a bid to expand their footprint in complementary geographic regions. Security News Every Day – www. securityworldhotel.com 26 • d etektor internati onal