Tyco break-up follows Enron accounting debacle
Giant global conglomerate Tyco International has announced plans to divide up its empire into four separate companies, in the wake of Enron's use of aggressive accounting policies.
The break-up, which marks one of the biggest company splits in history, is the first corporate reaction to the collapse of Enron after it emerged the energy company’s used ‘aggressive accounting policies’ and special purpose vehicles, to move debt off its balance sheet.
The giant corporation, whose business spans healthcare, security, electronics, fire protection and financial services, took the radical decision following investors’ concerns over its own aggressive accounting policies.
Tyco said its action would ‘lead to substantially greater total shareholder value by creating independent companies that will be more appropriately valued by the market’.
The company’s healthcare; fire protection & flow control; and financial services businesses will be taken public.
Its security & electronics businesses will be made into a fourth independent, publicly listed company. Tyco Plastics, a plastics manufacturer will be sold.
Dennis Kozlowski, chairman and chief executive officer of Tyco, said: ‘As independent, public companies, each of these businesses will offer investors a “pure-play” opportunity with excellent growth prospects and greatly increased simplicity, clarity and transparency. As such, we believe each will be valued substantially higher than the implied valuations it has received in recent years as part of Tyco.’