|Tyco's senior executive management team at the NYSE on Monday as they rang the closing bell. George Oliver (center), the company’s new CEO, rang the bell on Monday.|
One week after Tyco made its split into three independently-run companies official, the “new Tyco’s” management team came together at the New York Stock Exchange to celebrate and ring the closing bell that signals the end of the day’s trading session. NYSE began having special guests ring the closing bell on a regular basis in 1995.
Shortly before doing the honors, chief executive officer, George Oliver, along with Arun Nayar, executive vice president and chief financial officer of the new Tyco, and Mark VanDover, president of the Tyco Security Products business unit, joined SDM for an interview. They discussed trading and analyst response to the new publically-traded Tyco, challenges in integrating parts of ADT into the Fire & Security business, Ed Breen’s legacy and the company's future.
SDM: It’s been a week since Tyco’s split became official. How does it feel to arrive at the New York Stock Exchange with that accomplishment under your belt?
Oliver: It’s been really exciting here over the last week, really culminating a lot of work that has been done over the last year in being able to successfully separate these companies. We’re going to be obviously the remaining Tyco. But even with that we’re going to be a very different company going forward. We’re going to be the industry leader in fire and security with $10.5 billion in revenue. We’re taking a leadership position that we had in commercial security, which was part of the ADT Security segment and combining that with what I had responsibility for, which was Tyco Fire Protection, with which we had a leading division in fire. The combination of the two has come together very nicely in the new company.
On day one, we had over 10,000 of our employees connected with town hall meetings across the globe that were celebrating our day one last Monday. So if the excitement and enthusiasm that they had was a sign of what the future holds — it’s very bright. Because everyone is very excited about the new company and the prospects that we have now operating as a pure play company .
VanDover: When we did our day one celebration around the world we had video conferences, web conferences and an internal [social network] we use called Yammer. The response across the world has just been overwhelming. Everybody’s pumped up about the new company, the new direction, the pure play nature of our business: our ability to really focus in on our fire and security products and services. It’s a great beginning for us.
Oliver: The other thing is I think the market response has been very positive also. Two weeks prior to separation we spent a lot of time with our investors laying out the new company. And subsequent to that we have met one-on-one with a number of our investors. And as you can see in the market, it’s been a very favorable response with the strength that we have now with this new company going forward.
SDM: What kind of response have you seen in trading since becoming a public company last week?
Nayar: [We’ve seen a] very positive response. In the first week of trading we’re up just over nine percent on some pretty high volumes. Pretty much about twice the level of the average trading volumes this year. So a lot of interest. The first three analyst reports that came out had a good, strong reading. So both from the analyst community and the investor community, the response has been very positive.
Oliver: As the industry leader of the space we’re in, I think it’s an attractive piece of a portfolio to invest in.
VanDover: As you can imagine as we launched the new company, George and his senior leadership team have been out on investor roadshows, a big analyst day, an investor day here in New York and feedback from all of the sessions has been very positive.
SDM: What do you see as the most difficult part of the spinoff process? And is that behind you or is it still to come?
Oliver: the way I would look at this is we did this back in 2007 and at that time we had market-leading companies in healthcare and in the electronic space and those two companies were successfully spun out with the thought that the remaining part — there was still more work to be done to get them in position. We have market-leading positions with the three companies that separated here recently. So the execution of the separation — we have experience in doing that. For us operationally it was mainly separating the commercial security business, which was part of ADT Security Solutions, from the ADT North America residential security business. So that has been where a lot of our focus has been to successfully separate those business and begin to integrate the commercial security business with what we had within Tyco Fire Protection. Other than that, we’ve been on a timeline. When we started a year ago, our target was to separate by Sep. 28, which ultimately we did. And so that, I feel as I reflect on the last year, a lot of expertise, a lot of flawless execution and I think all of the business are going forward from a position of strength.
SDM: You mentioned the previous spinoff that happened in 2007. In your role as the new CEO, how do you view Ed Breen’s legacy? And do you feel that you are continuing on in his footsteps or taking the company on an entirely new direction?
Oliver: I’ve worked with Ed for the last six years and he and I are very much aligned with the strategy of the company, where the companies come from and ultimately where we need to go. Ed is going to continue on as our chairman. So even though he’s retired as the chief executive officer, he is going to be our non-executive chairman of the board. So I will continue to work with Ed very closely on the board. When you think about Ed’s legacy […] the first phase was the “save it” and that’s when the company was in crisis from a debt standpoint. Then “fix it” and then ultimately “grow it.” His belief in the previous separation but even with this separation was that you have strong, market-leading companies that have the ability to be able to utilize their own capital and be able to accelerate growth. And the way that these companies have been set up is ultimately to continue to accelerate that performance. And so, the focus going forward is we’re going from somewhat of a holding company structure with different businesses to now what I’d call an operating pure play company. And it has every opportunity now with similar fundamentals in place across our businesses to better leverage our capabilities focusing on the customer and growing while we’re continuing to find ways to leverage the infrastructure to free up resources to be able to invest in that growth. So Ed and I would be very much aligned with what the next chapter of the company is going forward.
SDM: To most it seems that the split will make each unit more attractive to potential buyers. Could you address some of the speculation about the intention behind the split?
Oliver: Each of these businesses are market-leading companies that are separating from a position of strength. And when we look at the combination of businesses that are coming together to make the new Tyco, we have tremendous opportunity going forward as a pure play within the fire and security industry. We see significant opportunity to deliver a lot of shareholder value operating these businesses. We put in a world-class management team with strong operating business leaders as well as world-class functional leaders and our sole focus is executing on this growth strategy.