MANSFIELD – Tyco International Ltd., the world’s largest maker of security systems, agreed to sell a majority stake in its Electrical and Metal Products unit to a buyout firm for $720 million, withdrawing plans to spin off the division, the company announced Tuesday along with its fourth-quarter earnings results.
The proceeds from the 51 percent stake sale to Clayton Dubilier & Rice LLC will be used to accelerate share buybacks under a $1 billion program announced on Sept. 8, the Schaffhausen, Switzerland-based company said Tuesday.
The unit manufactures tubing, sprinkler pipe and metal-clad electrical cables. The division will operate as a standalone entity under the name Atkore International.
“The transaction sharpens our focus on our core security, fire and flow control platforms and reduces our exposure to the cyclical steel and copper markets,” Tyco CEO Ed Breen said in the statement.
For Clayton Dubilier, the purchase adds to other industrial holdings that include a 42.5 percent stake in Univar, the biggest U.S. chemical distributor. Clayton Dubilier sold Brakes, a food supplier to caterers in the U.K. and France, in 2007 after boosting the company’s earnings before interest, taxes, depreciation and amortization by 70 percent, according to the firm’s website.
Tyco reported fourth-quarter earnings per share from continuing operations excluding one-time items of 74 cents, based on net income from continuing operations of $273 million. The average analyst estimate in a Bloomberg survey was 66 cents. Profit for all operations totaled $268 million, an increase of 29.47 percent.
The company reported revenue growth of 3.96 percent to $4.49 billion in the quarter.
Earnings for the full year totaled $1.14 billion, a turnaround from a $1.79 billion loss in fiscal year 2009, as revenue grew 0.79 percent to $17.02 billion.
“For the full year, we increased our earnings per share 15 percent, reflecting a sustained reduction in our overall cost structure. At the same time, we strengthened the focus of our portfolio around our core security, fire and flow control platforms,” the company said in its earnings release.
The Flow Control division, based in Mansfield, a provider of water and environmental systems as well as thermal and flow control solutions, saw revenue decline 5 percent to $868 million in the three months ended Sept. 24.
Flow Control operating income was $104 million in the fourth quarter, down from $120 million for the same period a year earlier. Operating margin shrunk to 12.0 percent from 13.2 percent quarter-over-quarter.
The division also reported full-year revenue of $3.37 billion, shrinking 3.5 percent. Operating income dropped 17 percent to $410 million from $496 million.
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