Tyco's Flow Control Unit Merges with Pentair in $4.5B Deal

Swiss-based Tyco International (NYSE:TYC) is merging its flow-control business with Pentair (NYSE:PNR) in an all-stock deal valued at about $4.53 billion as it continues to execute earlier plans to split into three separate companies.

Tyco in September said it would split its ADT home alarm unit, flow-control group and fire and safety unit into three separate companies.

The transaction with Pentair, which provides Tyco Flow with greater global opportunities, growth prospects and financial strength than if it were to stand alone, accelerates that vision, Tyco said.

The transaction will boost the global footprint and capabilities of both companies’ flow control businesses, bringing together two of the world’s biggest players in water and fluid products systems.

The combined company will post an expected $7.7 billion in revenue this year. The merger also widens their presence in the key energy, infrastructure and industrial sectors, and provides annual synergies of $250 million.

Upon completion of the deal, which has been approved by both companies’ boards of directors, Tyco shareholders will own about 52.5% of the company, which will be officially known as Pentair and led by Pentair’s current CEO Randall Hogan.

Pentair holders will own the remaining 47.5%.

“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,” Hogan said.

The deal is subject to regulatory approval and acceptance of both companies’ shareholders.

Meanwhile, Tyco said it expects to complete all transactions related to its planned split - including the one with Pentair - by the end of September.