Tyco To Sell ADT Korea To Carlyle Group For $1.93 Bln; Cuts Q2 EPS View

(RTTNews) - Swiss security products maker Tyco International Ltd. (TYC) has agreed to sell Tyco Fire & Security Services Korea Co. Ltd. and its units such as ADT Caps Co., Ltd., Capstec Co., Ltd. and ADT Security Co., Ltd., which form and operate the firm's South Korean security business or "ADT Korea" to The Carlyle Group (CG), in a cash deal worth about $1.93 billion. The deal may close in Tyco's fiscal third quarter of 2014.

The company said its net cash proceeds from the transaction are anticipated to be $1.85 billion. The proceeds would allow Tyco to increase cash deployed for earnings-accretive activities like strategic acquisitions, share buybacks and organic growth initiatives, as well as other corporate purposes.

Tyco's Chief Executive said: "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 provider of advanced security solutions in South Korea, serving around 475,000 small-and-medium-sized businesses, commercial and residential customers. For fiscal 2014, ADT Korea is expected to generate revenue and operating income of some $600 million and $125 million, respectively, with an EBITDA margin of about 30%, contributing annual earnings per share to Tyco of around $0.20. Tyco said its financials would be re-cast to report this business as a discontinued operation.

Looking ahead to the second quarter, the company now sees earnings per share from continuing operations, excluding items, to be in the range of $0.39 - $0.41, versus its original $0.44 - $0.46 range. On average, 15 analysts polled by Thomson Reuters expect earnings per share of $0.46 for the second quarter. Analysts' estimates typically exclude one-time items.

Separately, Tyco's board has approved an additional $1.75 billion authorization for share buybcak, which is in addition to the remaining $250 million authorization, bringing the total share repurchase authorization to $2 billion.