Tyco to split in three
'Tis the season for splitting up conglomerates and overextended oligopolies. First IAC, then Cendant, then Viacom, and now Tyco.
Bermuda-based Tyco International, most notorious for the embezzlement of CEO (now convict) Dennis Kozlowski and other execs has been a grab-bad conglomerate of rather different businesses. Even Kozlowski had planned to split it up before massive fraud accusations made that a difficult prospect. The company is now under new management and has managed to recover from the scandal. The next step is to split a hard-to-manage conglomerate.
The board recently OK'd a plan to split into the following three publicly-traded companies by 2007:
- Tyco Fire & Security, which had revenue of $18 billion
- Tyco Healthcare, which had revenue of $10 billion
- Tyco Electronics, which had revenue of $12 billion in revenue
The Fire & Security divisions most recognizable brand is the ADT alarm and security service company. The company also provides Government and Corporate Security (where it is the world leader) through its ADT, Kantech, American Dynamics, and other brands. Fire detection (Tyco is also #1 here) features the brands Tyco, Simplex, Wormald, and DBE. The company's building fire suppression systems (Tyco is #1 in the world) are sold under the names Macron, SimplexGrinnell, Ansul, Tyco, Niedner, and others. The company provides retail theft protection devices and systems to large retailers under brands like Sensomatic, ADT, and Kantech, and it is a pioneering supplier of RFID (radio Frequency Identification) technology for major retailers. RFID is used for both inventory control and as an anti-theft system. It also manufactures safety and protective equipment for professional firefighters. The company also sells traffic management systems. It sells health care communication system, including hospital paging systems and nurse call systems.
The Healthcare group sells a variety of medical devices and products, including needles and syringes, oxygen and CO2 meters, surgical instruments and dressings, catheters, respiratory equipment, patient monitoring devices, and so on. It also is an over-the-counter drug producer, the #1 producer of acetaminophen in the world. It also produces some generic and branded pharmaceuticals as well. Over the years, Tyco accumulated a wealth of small- and mid-side medical businesses, including T.S. Surgical, Puritan-Bennett, Malinkrodt, Kendall, and others.
The Electronics business makes a variety of electronic components (over 300,000 different ones), such as connectors, relays, converters, filters, and power supplies, under such names as AMP, P&B, and Schrack. . It is the world's largest supplier of what are called "passive components". These products are used in the manufacture of defense and space equipment, telecommunications, automobiles, medial devices, and consume electronics, among others. The company also has a Telecommunications division that delivers turnkey systems for a variety of industrial and government clients.
There is also Tyco Engineered Products & Services which makes industrial valves and controls and fire sprinklers. In addition, and there is Tyco Metal Products with makes steel tubular products and metal support systems. We are not sure where these divisions will end up.
Tyco had already sold off some other divisions, including its significant transoceanic fiber optic cable operations (the world's largest) to Indian conglomerate Tata earlier this year for a measly $120 million -- the network was valued at $3 billion during the heyday of the high-tech bubble. It also had sold off its Tyco Plastics & Adhesive division, which makes and sells everything from tape to plastic sheeting to garbage bags to a private equity firm for a little less than $1 billion. Other smaller divisions have also been sold.
This catalog of diverse products was accumulated through a fanatical program of acquisitions over four decades. The company started as an environmental and materials science company in the 1960s and just kept buying manufacturing firms. The insanity of managing so many diverse companies perhaps led the executives to go crazy on piling up the perks. A swe have stated before, conglomerates are extremely difficult to
