What is the main purpose of this 8-K filing?

This 8-K filing announces Tyco International Ltd.'s entry into a material definitive agreement to sell a majority interest in its Electrical and Metal Products business, held by the newly formed Atkore International Group Inc., to an affiliate of Clayton, Dubilier & Rice, LLC for $306 million. It also details the terms of the agreement and the implications for Tyco's financial reporting.

What is Atkore International Group Inc. and what will be its relationship with Tyco?

Atkore International Group Inc. is a newly incorporated holding company created to house Tyco's Electrical and Metal Products business. Following the investment, Tyco will retain a 49% equity interest (on an as-converted basis) in Atkore, while CD&R Allied Holdings, L.P. will hold the remaining 51%. This structure means Tyco will no longer consolidate Atkore's financial results.

How does this transaction differ from the previously announced spin-off?

Instead of a full spin-off, which would have resulted in Tyco shareholders receiving shares of the separated business, Tyco has opted for a strategic investment. This allows Tyco to bring in a financial partner (CD&R) and capital while retaining a significant minority stake, rather than fully divesting the business.

What are the key conditions for the closing of this investment agreement?

The consummation of the investment is subject to several customary conditions. These include the absence of a Material Adverse Effect on the Electrical and Metal Products business, the expiration or termination of waiting periods under antitrust laws (like the Hart-Scott-Rodino Act) and obtaining foreign antitrust clearance, and the completion of a marketing period for new third-party financing for Atkore.

JCI 8-K: Material Agreements

Summary

Tyco International Ltd. (the "Company") announced on November 9, 2010, a significant shift in its strategy regarding its Electrical and Metal Products business. Instead of proceeding with a previously announced spin-off, the Company has entered into an Investment Agreement with CD&R Allied Holdings, L.P., an affiliate of Clayton, Dubilier & Rice, LLC. This agreement involves the sale of a majority interest in the newly formed Atkore International Group Inc., which will hold the Electrical and Metal Products business, to the investor for $306 million. This transaction represents a move away from a full separation of the business, instead opting for a strategic partnership that will see Tyco retain a significant minority stake (49% on an as-converted basis) through its subsidiary, Tyco International Holding S.à r.l. As a result, Tyco will deconsolidate the Electrical and Metal Products business from its financial statements. The deal is subject to customary closing conditions, including antitrust approvals. The company expects the transaction to also involve new debt financing for Atkore and the repayment of existing debt within the business unit.

Key Highlights

1Tyco International Ltd. is selling a majority interest (51%) in its Electrical and Metal Products business, newly housed in Atkore International Group Inc., to CD&R Allied Holdings, L.P. for $306 million.
2The transaction is structured as a sale of preferred stock in Atkore, with Tyco retaining a 49% stake on an as-converted basis.
3Tyco will discontinue its previously planned spin-off of the Electrical and Metal Products business in favor of this investment.
4The Electrical and Metal Products business will be deconsolidated from Tyco's financial statements following the closing of the investment.
5Atkore is expected to incur new third-party debt financing of up to $465 million, partly to repay $400 million of existing indebtedness within the business.
6The agreement includes customary closing conditions, such as antitrust approvals and the absence of a Material Adverse Effect.
7Tyco's subsidiary will retain board representation rights and certain consent rights over significant company actions in Atkore.
8The agreement allows for a potential initial public offering (IPO) of Atkore after three years, with specific rights for both parties.

Johnson Controls International plc 8-K Report, Material Agreement (Nov 10, 2010)

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