The US company Johnson Controls merge with Tyco International, creating a company with total market capitalization of over 40 billion USD. The new merged company will be based in Ireland due to lower tax rates. The deal is a sign that market volatility has not stopped strategic mergers. Johnson Controls, which market capitalization reached 23 billion USD, makes heating and ventilation and automotive batteries, while Tyco International has market value of 13 billion USD and specialized in fire protection systems. The merged company will have cost reduction of about 150 million USD annually only from taxes, after its headquarters was established in the legal domicile of Tyco.
The new company will be called Johnson Controls Plc and will be led by the CEO of Johnson Controls Alex Molinaroli. The company will continue to be traded on New York Stock Exchange. The shareholders of Johnson Controls will hold about 56% of the combined company and will receive cash compensation of about 3.9 billion USD. The merger will save the both companies at least 500 million USD in the first three years.
Johnson Controls also will stop its business for car seats and interiors in the first quarter of 2017. Shares of the company are down with over 25% since the beginning of 2015, while those of Tyco decreased with over 30%. After the announcement of the companies merger, the shares of Johnson Controls dropped by 0.8% to 35.30 USD per share, before the market opening, while those of Tyco rose with 10% to 33.65 USD per share.