This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Tyco Sells Korean Business To Carlyle For $1.9B

NEW YORK (The Deal) -- Carlyle Group LP prevailed in an auction with an agreement to pay $1.93 billion for the South Korean security operations of Tyco International (TYC - Get Report).

Carlyle said on Monday that it will buy Tyco Fire & Security Services Korea Co. Ltd. and its three subsidiaries, collectively known as ADT Korea, from Tyco for just under 11 times forecast 2014 Ebitda of $180 million.

"ADT Korea is a highly stable and profitable business with attractive market positioning, strong brand power and excellent cash flow profile," said Carlyle Asia buyout managing director Sanghyun Lee in a statement. "Korea is one of the few countries in Asia that generate stable economic growth along with consistent deal flow of large buyout transactions."

Tyco said it expects to net $1.85 billion in cash from the sale and said the deal would cost it about $0.20 of earnings per share, per annum. Tyco's board said it would use the funds to increase a previously announced share buyback by $1.75 billion to $2 billion.

Must Read: Berkshire Hathaway's Next Elephant Acquisition

Seoul-based ADT Korea provides security services to about 475,000 businesses and residential customers and operates 69 outlets. The company is expected to post sales of $600 million in 2014, up from $560 million for 2013. It has an operating margin of about 21% and an Ebitda margin of 30%.

"While ADT Korea is healthy and profitable, this transaction represented a unique opportunity to realize the value generated in the business over time and redeploy it to further enhance our portfolio and maximize shareholder value," Tyco CEO George Oliver said in a statement.

Neuhausen, Switzerland-based Tyco spun off much of its security operations in 2012 when it listed its U.S. business, ADT Corp., as part of a wider effort to shed its conglomerate heritage and focus on safety equipment and fire-fighting systems.

Tyco bought a 68.5% stake in the South Korean unit, then called Caps Co., in 1999, before acquiring the rest of the company and delisting it in 2012.

The Swiss company approached a handful of private equity shops at the end of last year as it looked for a buyer for the South Korean unit. Reports in January said it had shortlisted Carlyle, Kohlberg Kravis Roberts & Co., Bain Capital LLC and IMM Private Equity Inc.

Carlyle, led by co-founder and CEO David Rubenstein, said that equity for the transaction will come from two of its funds, Carlyle Asia Partners IV and Carlyle Partners IV. Carlyle has been one of the most active U.S. funds in South Korea, where it had struck 17 acquisitions up until the end of last year, amounting to a total equity investment of more than $920 million.

Carlyle's debt for the ADT Korea deal will be provided by Korea Exchange Bank, Kookmin Bank, Industrial Bank of Korea, Korea Investment & Securities and UBS. It took legal advice on the deal from Clifford Chance LLP and Lee & Koh.

Tyco took financial advice from Morgan Stanley. Legal counsel was provided by Simpson Thacher & Bartlett LLP and Kim & Chang.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
TYC $36.42 0.10%
AAPL $113.81 0.46%
FB $90.61 -0.44%
GOOG $632.21 0.29%
TSLA $252.50 1.60%

Markets

Chart of I:DJI
DOW 16,596.41 -46.60 -0.28%
S&P 500 1,976.69 -12.18 -0.61%
NASDAQ 4,801.9720 -26.3530 -0.55%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs