Glendale-based global multi-industrial firm Johnson Controls Inc. announced recently that it plans to acquire Irish fire protection and security solutions company Tyco International plc, and revealed that the combined company’s global headquarters and legal domicile will be in Cork, Ireland, a city of about 120,000 residents.
“This is a transformational transaction that will help us both serve our customers comprehensively and innovatively,” said Johnson Controls chairman and chief executive officer Alex Molinaroli in a callwith analysts. “The new Johnson Controls will be a highly attractive industrial leader.”
By locating its global headquarters in Ireland, Johnson Controls said it expects to save $150 million annually in taxes.
The combined company’s primary North American operational headquarters will be in the Milwaukee area. Johnson Controls revealed few details about how the merger with Tyco will impact local operations.
“We have no plans to change operations (in the Milwaukee area),” Johnson Controls spokesman Fraser Engerman said. “We have made no decisions on future possible expansion in Milwaukee.”
About a year ago, BizTimes Milwaukee reported that Johnson Controls was working on plans for a 50-story, 1.2 million-square-foot building near the lakefront in downtown Milwaukee. The
company would not comment on those plans, but later agreed to split the cost of a feasibility study for the lakefront site, which will be freed up for development after the Lake Interchange is reconfigured.
It remains unclear how the merger with Tyco will impact Johnson Controls’ potential plans for a downtown office tower.
“The city would be eager to have Johnson Controls as a partner (to develop the site near the lakefront), but we are by no means in an exclusive relationship with them,” Department of City Development spokesman Jeff Fleming said. “At this point, we have approved a joint funding mechanism and we are both interested in examining the potential of the site. We are not chatting about specific work being done.”
The companies will be combined under Tyco International plc, and the new company will be called Johnson Controls plc. Johnson Controls shareholders will own 56 percent of the equity of the combined firm, for aggregate cash consideration of about $3.9 billion.
The total transaction price was not disclosed, but a Reuters report pegged it at $16.5 billion.
Johnson Controls said in a release that the deal is expected to create $650 million in synergies for the combined firm.
The transaction is expected to close at the end of 2016, and the new company’s shares will continue to trade under the JCI ticker on the New York Stock Exchange.
Molinaroli will serve as chairman and CEO of the merged company for the first 18 months. After that, he will serve a one-year term as executive chair. Tyco CEO George Oliver will serve as president and chief operating officer for the first 18 months, then will become CEO. After another 12 months, he will become chairman and CEO. The board of directors of the combined firm will be composed of six Johnson Controls directors and five Tyco directors. Oliver will serve as a director until he takes over the chairman role.
The merger is still subject to shareholder approval and regulatory review.
“This combination of Johnson Controls and Tyco, it will create a better company and I cannot be more excited about this new company and the opportunities that lie ahead,” Molinaroli said.
