Its official! Johnson Controls Inc (JCI.N) to merge with Tyco International Plc (TYC.N)

In a significant development, car batteries maker Johnson Controls Inc (JCI.N) and the Ireland-based security systems maker Tyco International Plc (TYC.N) have confirmed Monday that the two entities would soon merge and the new entity would be named as Johnson Controls PLC.

Post merger, shareholders of  Johnson Controls Inc (JCI.N) are to own 56 percent of the new company and also get a cash compensation of $3.9m.On the other hand, shareholders of Tyco International Plc (TYC.N) will own 44 percent of the newly formed company.

A Wall Street Journal report estimated the value of the combined company to be anywhere between $15 bn and $20 bn. Under the terms of the merger, the shares of the new company are to be listed on the New York Stock Exchange (NYSE) and they would be traded under the ‘JCI’ ticker.

In a joint press statement, the two companies said the new company will continue to maintain the Irish legal domicile of Tyco International Plc (TYC.N) and make use of its global headquarters located in Cork.

However, the new entity will function from Milwaukee, where Johnson Controls Inc (JCI.N) has its North America headquarters.

In addition to car batteries, Johnson Controls Inc (JCI.N), which is a Fortune 500 company, makes ventilation and heating equipment, while Tyco International Plc (TYC.N) makes fire protection systems apart from security systems.

In the press statement, the two companies said their combined deliveries would be in the region of $500 million during the initial three years of the merger, which is likely to come into effect by end of 2016 fiscal.

The following changes would take place in the top executive of the combined company: For the first 18 months after the closing of the merger, CEO of Johnson Controls Inc (JCI.N), Alex Molinaroli, will function as the chairman and chief executive officer. For the next one year, Tyco International Plc (TYC.N) CEO George Oliver will take over as the CEO. During the same period, Molinaroli will function as the executive chair of the new company. After two and a half year period, Oliver will take over as the chairman and CEO of the merged company.

Post merger, the new company is expected to have a new board of directors with 11 directors. Six of the directors will be from Johnson Controls and the other five directors are to be from Tyco.

Meanwhile, shares of Johnson Controls rose by 1.7% and that of Tyco 15.6% in pre-market trading early today.

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