Originally Published MX March/April 2006

BUSINESS NEWS

The January announcement by Tyco International Ltd. (Pembroke, Bermuda) that it plans to split into three publicly traded companies has raised concerns among members of the investment community. In particular, analysts have expressed unease over the $40 billion conglomerate's postsplit performance, particularly in regard to reduced earnings and the estimated $1 billion cost associated with the transaction, which is expected to close a year from now.

Of perhaps even greater concern is how Tyco's debt will be allocated across the new companies. It's also uncertain how the dividing company will allocate responsibility for the hundreds of pending lawsuits from stockholders who lost billions when Tyco's stock collapsed in 2002. The collapse followed disclosures of accounting fraud and looting of the corporate treasury by former CEO Dennis Kozlowski, former CFO Mark Swartz, and other past senior executives.

Under the terms of the proposed split, Tyco would break up into three separate and independent companies focusing on core businesses in fire and security, electronics, and healthcare. The fire and security company would also include Tyco's fourth major business segment of engineered products and services.