Ingersoll-Rand (IR) said Monday it is looking to spin off its commercial and residential security business into a separate publicly-traded company so that both can focus on their distinct strengths and strategies.

The existing company, whose board unanimously approved of the split, will continue to operate through its industrial, transport refrigeration, and heating, ventilation and air conditioning groups, while the newly-formed business will focus on electronic and mechanical security.

“We believe the spin-off will allow both companies to enhance value by allocating capital and deploying resources in a more focused way, while preserving and increasing synergies within their businesses,” Ingersoll-Rand CEO Michael Lamach said in a statement.

Shares of Dublin-based Ingersoll-Rand climbed more than 2.4% Monday morning to a 52-week high of $50 following the announcement. The deal, which is expected to be tax free to shareholders, is slated to close within the next 12 months.

Lamach, who will continue to serve as CEO of the existing Ingersoll-Rand following the breakup, said the maneuver will position both companies to better execute their respective strategic plans and capitalize on future market opportunities.

The remaining HVAC and industrial company will have annualized revenue of about $12 billion following the transaction, while the newly-created security business will have around $2 billion.The latter is also expected to have strong margins and brand recognition, with both the residential and security businesses realizing synergies from their combination.

Ingersoll-Rand said key decisions still need to be made regarding structure, management and governance and that it is developing detailed plans for the board’s further consideration and approval.

The security company’s leadership team will be announced within the year, before the spin-off is completed. Ingersoll-Rand will be surrendering its ownership interest in the new business.

Meanwhile, Ingersoll-Rand said its board has approved of a new buyback program of up to $2 billion beginning in 2013 and raised its quarterly dividend by 31% to 21 cents, payable on March 28 to shareholders of record on March 12.

Upon the split, both companies are expected to pay a combined quarterly dividend nearly equal to Ingersoll-Rand’s dividend at the time of closing. The deal remains subject to certain regulatory approvals and customary closing conditions.

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