Tyco announced that it has signed a definitive agreement to sell Tyco Fire & Security Services Korea and its subsidiaries that form and operate the Company's South Korean security business ("ADT Korea") to The Carlyle Group, in a cash transaction valued at approximately $1.93 billion.
Tyco announced that it has signed a definitive agreement to sell Tyco Fire & Security Services Korea and its subsidiaries that form and operate the Company's South Korean security business ("ADT Korea") to The Carlyle Group, in a cash transaction valued at approximately $1.93 billion. The transaction is expected to close in Tyco's fiscal Q3 of 2014, subject to customary closing conditions including required regulatory approval.
ADT Korea is a provider of advanced security solutions in South Korea, serving approximately 475,000 small-and-medium-sized businesses, commercial and residential customers. The business provides central monitoring services, with video surveillance and dispatch, access control and other customized security solutions as well as guarding services. The business is headquartered in Seoul, South Korea, with approximately 7,500 employees and a nationwide network that includes 69 branches.
"We are pleased to announce the sale of ADT Korea in a transaction that provides value to our shareholders," said George Oliver, Tyco's Chief Executive Officer. "While ADT Korea is healthy and profitable, this transaction represented a unique opportunity to realize the value generated in the business over time and redeploy it to further enhance our portfolio and maximize shareholder value. We continue to execute on our three year strategy which positions us to deliver a 15% earnings per share CAGR in fiscal 2015."
"ADT Korea is a leader in the South Korean market, with a strong management team and highly dedicated employees. We thank them for their contributions to Tycoand know they will continue to thrive within The Carlyle Group."
Tyco's net cash proceeds from the transaction are expected to be $1.85 billion. The proceeds will allow Tyco to increase cash deployed for earnings-accretive activities, such as strategic acquisitions, share repurchases and organic growth initiatives, as well as other corporate purposes.
Financial Highlights:
For fiscal 2014, ADT Korea is expected to generate revenue and operating income of approximately $600 million and $125 million, respectively, with an EBITDA margin of approximately 30%, contributing annual earnings per share to Tyco of approximately $0.20. Tyco's financials will be re-cast to report this business as a discontinued operation.
As a result of the transaction, the Company expects that approximately $0.05 of EPS in the second fiscal quarter will now be reflected in discontinued operations. Therefore, the Company is updating its EPS guidance solely for this reclassification. The Company now expects EPS from continuing operations before special items for the second fiscal quarter to be in the range of $0.39 to $0.41 compared to original guidance of $0.44 to $0.46. The Company will provide an update on full year guidance during the quarterly earnings call to be held in April.