Tyco International Ltd. (TYC) announced its agreement with Oceania Capital Partners Limited to acquire OCP’s Signature Security Group for AU $171 million ($170 million).
Tyco is likely to integrate Signature Security’s Australian and New Zealand operations with its ADT Security business.
The acquisition will enable Tyco to strengthen ADT’s business in the Australian and New Zealand security markets while advancing its strategy for growth in the global security industry.
Tyco fills a wide range of the diversified needs of businesses and governments, educational and medical institutions, and commercial industries, ranging from food to automobiles. It also boasts leading brand names for products and services under Flow Control, Fire Protection Services, Safety Products and Electrical & Metal Products.
We are bullish on the company’s fortunes based on the relative stability of global security and fire markets, high and predictable cash generation, limited balance sheet risk, and easy cost-out opportunities. There is a potential catalyst in the company’s solid balance sheet and healthy liquidity position.
The company’s positive and high quality operating performance is commendable despite the accelerating weakness in global non-residential construction and project-related end-markets.
The company’s business strategy includes acquiring companies and making investments that complement its existing businesses. These acquisitions and investments could be unsuccessful or consume significant resources, which would adversely affect its operating results.
The company continues to be subject to a number of lawsuits stemming from the actions of its prior senior management. Adverse outcomes of these matters could impact its financial condition, results of operations or cash flows. Material adverse legal judgments, fines, penalties or settlements could adversely affect its financial health and prevent it from fulfilling obligations under its outstanding debt.
Based in Pembroke, Bermuda, Tyco International Ltd. operates in 60 countries and manufactures security products and services, fire protection and detection products and services, valves and controls, and other industrial products. The major competitors of Tyco are General Electric Co. (GE), Honeywell International Inc. (HON) and United Technologies Corp. (UTX).
We currently have a Neutral recommendation on Tyco International Ltd.
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