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Unification to be completed with $10 billion all-stock merger
Pentair Inc. and Tyco International Ltd. have announced a definitive agreement to combine Tyco’s flow control business (Tyco Flow) with Pentair in a tax-free, all-stock merger. The transaction values Tyco Flow 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% of the combined company, and Pentair shareholders will own approximately 47.5%.
The combination will bring together complementary leaders in water and fluid solutions, valves and controls and equipment protection products to create a premier industrial growth company. The merged company, with estimated pro forma 2012 revenues of $7.7 billion, is expected to create enhanced shareholder value through:
• increased global scale with greater access to developed and fast growth regions;
• broader presence in key sectors with greater opportunity to capitalize on growth trends in the energy, infrastructure and industrial sectors;
• more robust portfolio of complementary products and customer solutions;
• significant operational and tax synergies; and
• strong balance sheet and cash flow generation to support growth and return of capital to shareholders.
The new company will be named Pentair and will be led by Randall J. Hogan, Pentair’s current chairman and chief executive officer.
“This is a highly compelling, transformational transaction, bringing together two great companies to create substantial value for shareholders and enhanced growth prospects,” said Hogan. “The addition of Tyco Flow perfectly aligns with Pentair’s growth strategy to expand globally, invest in high growth platforms and leverage the Pentair Integrated Management System to generate strong shareholder returns. We believe that by combining with Tyco Flow, we can unlock substantial synergies, meaningfully increase our global presence and better serve our customers with a broader offering and expanded capabilities. 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.”
“We look forward to welcoming the Tyco Flow employees to Pentair. We believe our shared vision and commitment to operational excellence will provide even greater value and facilitate a smooth integration. We are creating an even stronger company with the scale to capitalize on further growth opportunities and the ability to better serve our global customers, drive profitability and enhance shareholder returns.”
“This transaction provides compelling value for Tyco shareholders through ownership in a combined company with earnings and cash flow prospects that are greater than an independent, publicly traded Tyco Flow," said Ed Breen, chairman and chief executive officer of Tyco International. “When we announced plans for the three-way split of Tyco last September, we emphasized the value-creation opportunities for our shareholders. By combining Tyco Flow with Pentair to create a leading global flow and filtration company, we will have the opportunity to accelerate that value creation. This combination is a win-win for the shareholders of both companies.”