Tyco International (TYC) and Johnson Controls (JCI) Announce Merger

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Tyco International plc (NYSE:TYC) has just announced that they will be merging with Johnson Controls (NYSE:JCI) in a deal worth over $44 billion. Once the deal is completed, the headquarters of the combined entity will be in Ireland.

The merger will give Johnson Control shareholders 56% of the company, and Tyco International plc (NYSE:TYC) shareholders a 44% stake. The merger will drastically reduce expenses for the combined entity. Estimates have put savings at over $950 million in the first three years. This includes approximately $450 million in tax savings and another $500 million in operating costs over the three year period.

For the first 18 months, Johnson Controls’ Chief Executive Alex Molinaroli, will head up the company. Once this time period has expired, Tyco International plc (NYSE:TYC) CEO George Oliver will take over the CEO position and Molinaroli will become the company’s executive chairman. The stock closed at $30.6 during the last trading session. It is down 24.38% since June 18, 2015 and is downtrending. It has underperformed the S&P500 by 15.51%.

From a total of 8 analysts covering TYCO International (NYSE:TYC) stock, 2 rate it a “Buy”, 0 a “Sell”, and 6 a “Hold”. This means that 25% of the ratings are positive. The highest target price is $44 while the lowest target price is $31. The mean of all analyst targets is $36.63 which is 19.71% above today’s ($30.6) stock price. TYCO International was the topic of 18 analyst reports since August 4, 2015 according to the firm StockzIntelligence Inc. UBS upgraded shares on January 13 to a “Neutral” rating. Susquehanna initiated shares with a”Neutral” rating and a $36 target share price in their report from an October 8. Buckingham Research initiated TYC stock in a recent report from January 6 with a “Neutral” rating. Finally, Credit Suisse downgraded the stock to a “Neutral” rating in a report they issued on a December 14.

The institutional sentiment decreased to 0.97 in Q2 2015. It’s down 0.01, from 0.98 in 2015Q2. The ratio turned negative, as 42 funds sold all their Tyco International plc (Ireland) Ordinary Share shares they owned while 166 reduced their positions. 49 funds bought stakes while 153 increased their total positions. Institutions now own 351.00 million shares which is 4.40% less than the previous share count of 367.17 million in 2015Q2.

Edinburgh Partners Ltd holds 7.47% of its total portfolio in Tyco International plc (Ireland) Ordinary Share, equating to 2.11 million shares. Crestwood Capital Management L.P. owns 759,200 shares representing 4.44% of their total US portfolio. Moreover, Stevens First Principles Investment Advisors has 2.39% of their total portfolio invested in the company, equating to 89,500 shares. The Connecticut-based O'Shaughnessy Asset Management Llc has a total of 2.07% of their portfolio invested in the stock. Armstrong Shaw Associates Inc Ct, a Connecticut-based fund reported 245,605 shares owned.

Since March 6, 2015, the stock had 0 insider buys, and 4 insider sales for a total of $17.56 million in net activity. Costello Lawrence B sold 14,333 shares worth $516,503. Breen Edward D sold 320,965 shares worth $12.13 million. Reinsdorf Judith A sold 116,258 shares worth $4.38M. Oliver George sold 22,586 shares worth $862,756. The insider Yost R David bought 10,000 shares worth $399,500.

Tyco International plc provides security products and services, fire detection and suppression products and services, and life safety products worldwide. The company operates through three segments: North America Integrated Solutions & Services, Rest of World Integrated Solutions & Services, and Global Products. It designs, sells, installs, and services electronic security systems, and fire detection and suppression systems, as well as fire protection, security, and life safety products, including intrusion security, anti-theft devices, breathing apparatus and access control, and video management systems. The company offers its products under the Tyco, SimplexGrinnell, Sensormatic, Wormald, Ansul, Simplex, Scott, and ADT brands to commercial, industrial, retail, institutional, residential, small business, and governmental customers. It sells its products directly, as well as through wholesalers, distributors, commercial builders, and contractors. Tyco International plc was founded in 1960 and is headquartered in Mahon, Ireland.

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