Tyco Reportedly Weighs Breakup

It might spin off its healthcare and electronics businesses.
Author:
Publish date:

Tyco

(TYC)

is reportedly weighing a proposal to break itself into smaller pieces and undo the conglomerate structure built up in the 1990s by convicted fraudster Dennis Kozlowski.

Tyco's board will vote in Bermuda this week on a proposal to spin off the company's healthcare and electronics businesses, the

Wall Street Journal

said. The stripped-down surviving stub company would consist of security, fire-detection, valve and industrial pumps operations.

The proposed transaction represents the biggest initiative yet by CEO Ed Breen, who took over in 2002, to put distance between Tyco and the Kozlowski era. Kozlowski and former finance chief Mark Swartz were convicted last June of looting the company of hundreds of millions of dollars; both face stiff prison terms.

While Breen has been successful at purging Tyco of its considerable accounting problems, he has had less success coaxing investors back into the stock. One reason has been Tyco's disparate portfolio of businesses, a characteristic that has fallen out of favor in corporate finance circles over the last several years.

Tyco shares closed at $29.98 Friday, well off their four-year high of $36.58 touched in January 2005.