Editor, IFSEC Global

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Adam Bannister was Editor of IFSEC Global from 2014 through to November 2019. Adam is also a former Managing Editor at Dynamis Online Media Group.
January 25, 2016

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Wireless Access Control Report 2021

Johnson Controls on Brink of Buying Tyco International in $20bn Deal

Johnson Controls is in advanced talks to acquire Tyco International in a deal that could be worth $20bn.

Tyco’s Security Solutions and Fire Protection divisions will complement Milwaukee-based Johnson Controls’ building solutions division.

The deal, which would allow the US-based acquirer to slash its tax bill by shifting its tax domicile to Ireland, where Tyco is headquartered, comes at a time of considerable volatility in global markets.

The recent, sudden end of China’s building boom has been a major challenge for building solutions businesses like Johnson Controls, whose shares are down 25% over 12 months. Tyco shares have fallen 28% over the same period.

Founded in 1885 Johnson Controls develops technologies for optimising energy and operational efficiencies in buildings as well as various automotive technologies.

Tyco International – which is exhibiting at IFSEC International 2016 in June – was created in 2012 when the company’s security and fire protection divisions were hived off (the other two businesses to de-merge being ADT Corporation and Pentair). Tyco retained use of the ADT brand for security installation and services outside North America.

“Both companies share price has fallen significantly over the last year and I’m sure markets will see this as a positive move, counteracting Johnson Controls over exposure to the weakening Chinese market,” says Jim McHale, founder of Memoori, which conducts research into the smart buildings market.

“I believe Johnson Controls will be very happy to get their hands on Tyco’s Fire and Security portfolio. There are obvious synergies here with their buildings division.

“Johnson Controls have not kept up with the pace of innovation in Fire and Security,” he continues. “They remain strongest in building management systems and HVAC Controls, which have much more in common with their other divisions such as batteries and distributed energy storage.

“Tyco on the other hand have been relatively busy in building up their business. They acquired a respected VMS provider Exacq in 2013 and, more recently, retail analytics companies like ShopperTrak and FootFall. These join a list of well known brands such as SimplexGrinnell, Kantech, Visonic etc.”

The mooted acquisition would be the latest in a number of major deals struck in the security market over the past few years. Canon has been a prime mover, snapping up Milestone Systems in 2014 and Axis Communications in 2015. IN 2014 Vicon acquired IQinVision, OnSSI bought SeeTec and Panasonic acquired Video Insight.

The acquisitions are gradually consolidating what remains a highly fragmented market, with the 15 largest vendors in video surveillance, for example, accounting for just 52% of market revenues in 2014, according to IHS.

 

“It also seems that the deal marks the end of the Tyco name,” says McHale. “Since the conviction of former CEO Dennis Kozlowski, it went through two major restructurings.

“In 2007, it split into three units, Tyco Healthcare (now Covidien), Tyco Electronics (now TE Connectivity) and Tyco International. Then in 2012, Tyco International split again into three, spinning off ADT in the US and a flow control company, Pentair.

“Johnson Controls won’t have wanted some of the negativity that came with the Tyco brand and I think this is the reason they are going to bury the name.”

Notwithstanding any last minute hitches the Tyco deal is expected to be confirmed on Monday.

Tyco International will showcase its latest products in video surveillance, access control, intrusion and other security technologies at IFSEC International 2016, which takes place at London’s ExCeL between 21-23 June.

Click here to register to attend

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