Tyco To Acquire AMP For $11.3B
Diversified manufacturing and service company Tyco International Ltd. said Monday it will acquire electronic connector maker AMP Inc., which had been battling a takeover attempt by AlliedSignal Inc., in a stock deal worth about $51 a share, or $11.3 billion.
The global giant in security and fire protection systems (TYC) said in a statement that it expects the acquisition of AMP (AMP) to add to its earnings immediately and create a company with total market capitalization of about $54 billion, with total annual revenues in excess of $22 billion, and operations in over 80 countries.
AMP shareholders would receive 0.7839 shares of Tyco stock for each share of AMP.In early trading Monday, shares of Tyco fell 4.9 percent, or 3 3/16, to 61 7/8, while shares of AMP surged 6 percent, or 2 11/16, to 47 13/16.
Harrisburg, Pa.-based AMP had been fending off a four-month-long hostile-takeover attempt for $10 billion by AlliedSignal (ALD), which sought control by nominating its own slate of directors to the AMP board. The technology and manufacturing company had won court approval last week to pursue its consent solicitation seeking to fill the new board seats with its 17 nominees.
AMP argued that the effort would create a conflict of interest for the AlliedSignal members who might be elected to the AMP board.
Last week, AMP stock drifted higher on rumors that the company had found a "white knight" to save it from AlliedSignal's threat, according to Reuters.
Fueled largely by acquisitions such as its October $3.2 billion purchase of U.S. Surgical Corp. and last year's $5.6 billion purchase of the Bermuda-based security-alarm company ADT Ltd., Tyco has become one of the nation's fastest-growing industrial companies. Fourth-quarter earnings soared 54 percent before extraordinary items, according to a company release.
AMP was ripe for the picking. AMP's second-quarter net income fell 49 percent - affected by Asia's economic crisis - and its stock was trading near its 52-week low.
AMP had announced plans to shrink its work force in Canada anNorth Carolina and streamline operations.
"The combination with Tyco provides AMP a clear path to becoming the lowest-cost manufacturer," said Tyco's chief executive L. Dennis Kozlowski. "Additionally, the transaction will provide an immediate, positive earnings contribution to our shareholders."
Written By Lisa J Ulmer