Tyco Tops Views, Says Johnson Controls Merger Will Close Ahead of Schedule

By Anne Steele 

Tyco International PLC on Friday reported better-than-expected results in the most recent quarter and said its tie-up with Johnson Controls Inc. is set to close earlier than previously anticipated.

"We have continued to make great progress with integration planning for our merger with Johnson Controls. We are now in position to close the merger a month ahead of schedule," said Chief Executive George Oliver. He also reaffirmed that Tyco remains confident the deal will result in $1 billion in cost savings.

The companies agreed in January to merge in a $14 billion deal that creates a new giant provider of commercial-building systems and reflects a growing push by some executives and shareholders toward companies that are bigger but more focused. The deal will combine Johnson Controls' business selling heating and air-conditioning equipment for skyscrapers, schools, hospitals and other structures with Tyco's lines of security and fire-suppression gear into a company with more than $30 billion a year in sales.

The new company will be renamed Johnson Controls PLC but will maintain Tyco's Irish legal domicile -- a so-called inversion deal that brings shareholders tax benefits but has stirred controversy.

Tyco, a fire-protection and security systems company, moved its headquarters late last year to Cork, Ireland, from Switzerland, and does more than half its business outside of the U.S. The stronger U.S. dollar makes its products more expensive abroad.

In all for the June quarter, Tyco posted a profit of $239 million, or 56 cents a share, up from $156 million, or 37 cents a share, a year earlier. On an adjusted basis, earnings from continuing operations rose to 54 cents from 46 cents.

Revenue slipped 1.6% to $2.45 billion, as 1.5% organic growth was more than offset by a 3% negative impact from the stronger U.S. dollar against foreign currencies. Tyco said a three percentage point benefit related to acquisitions was fully offset by a 3 percentage-point impact related to divestitures.

Analysts polled by Thomson Reuters were looking for adjusted earnings of 53 cents a share on $2.44 billion in revenue.

Tyco shares, inactive premarket, have risen 18% over the past three months.

Write to Anne Steele at [e-mail]

(END) Dow Jones Newswires

July 29, 2016 08:27 ET (12:27 GMT)

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