Neil Sedaka may have once thought that breaking up was hard to do, but Tyco (NYSE:TYC) apparently has no such problems. Though rumors had started to creep out a few days ago, Tyco announced Monday morning that it was undertaking a significant corporate reorganization that would effectively result in splitting up the company's three main businesses into independent publicly-traded entities.
The New Tycos to Come
After setting Tyco Electronics (NYSE:TEL) and Covidien (NYSE:COV) free in 2006, Tyco has been operating as a three-pronged business entity. There is the ADT security business, a flow control business that sells valves, controls, actuators and the like to industries including power, water, and chemicals, and a commercial fire and safety business.
Now the company is going to undertake a year-long process of restructuring and tax-free spin-offs (technically conducted as stock dividends) that will result in the three companies operating and trading as free-standing independent entities. As part of the process, the company expects to incur something on the order of $700 million in expenses. (For related reading, see Parents And Spinoffs: When To Buy And When To Sell.)
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