Pentair Inc. and Tyco International announced a definitive agreement to combine Tyco”s Flow Control business with Pentair in a tax-free, $10 billion all-stock merger. The transaction values Tyco Flow Control at approximately $4.9 billion, including assumed net debt and minority interest. Upon completion of the transaction, which has been unanimously approved by the boards of both companies, Tyco shareholders will own approximately 52.5 percent of the combined company, and Pentair shareholders will own approximately 47.5 percent.
The combination will bring together offerings in water and fluid solutions, valves and controls, and equipment protection products to create what Tyco and Pentair called, in a joint statement, a premier industrial growth company. The merged company, with estimated pro forma 2012 revenues of $7.7 billion, will be named Pentair and will be led by Randall J. Hogan, Pentair”s current chairman and CEO.
Hogan said the addition of Tyco Flow Control aligns with Pentair”s growth strategy to expand globally and invest in high-growth platforms. “The new Pentair will be well positioned to benefit from the increased demands on energy, water, infrastructure and industrial process resulting from the growing population and wealth of developing economies,” Hogan said in a prepared statement.??Tyco is proceeding with the separation plan announced on September 19, 2011 and says it continues to expect to complete the transactions at the end of September 2012, including this combination of Tyco Flow Control and Pentair.
The combined company will be incorporated in Switzerland, where Tyco is currently incorporated, with main U.S. offices remaining in Minneapolis, Minn. where Pentair is based. Following completion of the transaction, the new Pentair is expected to have approximately 30,000 employees worldwide, with approximately 15,000 coming from Pentair and 15,000 joining from Tyco Flow Control.
According to market research by the McIlvaine Company, the Tyco Flow Control/Pentair merger will create a new market leader in the $323 billion Air/Gas/Water/Fluid Treatment and Control world market, with sales in this segment of $3.9 billion. However, despite rising to the top position, the merged company will still have only a 1 percent share of the total market, McIlvaine notes.
To read the official Tyco/Pentair merger statement, click here.