Tyco shareholders approve $4.9 billion Pentair deal

  • Article by: DEE DEPASS , Star Tribune
  • Updated: September 17, 2012 - 9:19 PM

The new company will keep headquarters in Golden Valley.

Tyco shareholders have given the Pentair deal the nod of approval.

Shareholders voted Monday to break off Switzerland-based Tyco into three pieces, including one that will merge with Golden Valley-based Pentair Inc. in an all-stock deal worth an estimated $4.9 billion.

The other two chunks will be a standalone residential security equipment and service firm called ADT North America and a separate company that specializes in commercial fire and security systems.

Pentair's U.S. shareholders approved the merger Friday. And now that Swiss shareholders have given the green light, the transaction is slated to close Sept. 28.

The merged entity will be named Pentair Ltd. and will effectively double Pentair's size to $7.7 billion in annual revenue and 30,000 employees around the world.

Tyco's massive flow control and valve business will also give Pentair a bolder presence in the global industrial water-processing business.

Pentair currently makes electrical enclosures and water pumps, filtration equipment, storage and treatment systems for the pool, spa, fire, municipal and industrial sectors. Tyco is a bigger player in flow control systems in the industrial, energy and oil sectors.

Analysts generally like the deal and said that the two sides' expertise should blend nicely and create new cross-selling opportunities.

Going forward, the combined Pentair Ltd. will be incorporated in Switzerland as part of a tax-saving effort. However, the new company will keep its corporate headquarters in Golden Valley and Pentair CEO Randy Hogan will lead the combined entity.

Hogan recently told analysts during an earnings conference call that "we continue to be excited about the merger. ... We believe this transaction is a great strategic fit increasing our global presence and exposure to high growth and attractive sectors." Hogan added that the deal had already "received U.S. and EU clearance" and that regulatory filings were underway in other foreign jurisdictions.

Pentair officials confirmed Monday that the Chinese government had approved the merger between Pentair and Tyco.

Hogan noted that Pentair had established an internal integration team with more than 40 managers and staff members who will plan how the two entities will function after the merger finalizes.

Pentair shares have traded higher since the Tyco deal was announced in March. Pentair stock closed at $42.35 Monday and total return (including dividends) for the year to date reached 28.75 percent, or nearly twice the total return of similar companies that make up the Standard & Poor's 400 industrials index.

Tyco's stock closed Monday at $54.90, down 34 cents.

Dee DePass • 612-673-7725

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