Tyco announces major restructuring, spin-off of telecommunications unit

Tyco International today announced it would break up itself up into four independent publicly traded company as part of a major restructuring initiative designed to erase its debt and unlock shareholder value. Tyco’s struggling telecom division will become part of its new Security and Electronics company, scheduled for IPO by the end of the year.

Tyco expects the IPOs and the sale of its plastics business will raise enough money to wipe out its $11 billion in debt. While the deal runs counter to Tyco’s previous strategy of buying and running diverse companies insulating itself from economic swings, Tyco CEO and Chairman Dennis Kozlowski said the individual companies in Tyco’s portfolio have matured to the point they can thrive on their own and would benefit without the yoke of Tyco’s large corporate structure.

“This is a bold, shareholder-driven plan that we believe will create extraordinary near- and long-term benefits for Tyco’s shareholders and bondholders, as well as our employees and customers,” Kozlowski said.

The new Security and Electronics company will be the largest, with revenues of $17.6 billion in 2001. In addition to Tyco’s submarine cable unit and its fiber-optics and wireless divisions, the company will include its power supply, circuit board and electronic component, and residential and business-security businesses. Kozlowski will stay on to head the company.