Ingersoll Rand’s board of directors unanimously approved a plan to spin off its commercial and residential security products businesses, which will be combined to form a new global company.

The announcement came less than one year after Ingersoll Rand (IR), Davidson, N.C., sold its security integration business in a guarded transaction. The buyer, Kratos Defense & Security, reportedly paid $20 million for the integration business, but its public announcement of the acquisition did not name the company.

The separation of IR’s security products units will result in two standalone companies: Ingersoll Rand, a creator of comfortable, sustainable and efficient environments through its industrial, transport refrigeration, and heating, ventilation and air conditioning (HVAC) businesses; and the new security company, a global provider of electronic and mechanical security products and services, delivering comprehensive solutions to commercial and residential customers. Ingersoll Rand expects the spinoff, which is intended to be tax- free to shareholders, to be completed in approximately 12 months.

Michael Lamach, IR’s chairman and chief executive officer, said, “We believe the spinoff, which is the result of an in-depth review of strategic alternatives by our board and management, will allow both companies to enhance value by allocating capital and deploying resources in a more focused way, while preserving and increasing synergies within their businesses. At the same time, it will position the new security company to build scale and make the necessary investments for the future.”

Under the plan, IR’s existing commercial security business (currently known as the Security Technologies sector) will be combined with its residential security business (currently part of the Residential Solutions sector). This new company’s portfolio of brands will include Schlage, LCN, Von Duprin, Interflex, CISA, Briton, Bricard, BOCOM Systems, Dexter, Kryptonite, Falcon and Fusion Hardware Group.

The new company is expected to have annualized revenue of approximately $2 billion, based on 2011 revenues. The new security company is expected to generate strong free-cash flow and have the financial flexibility to take advantage of future growth opportunities.

According to IR, the new security company is also expected to have strong margins, as well as strong brand recognition and market-leading products and solutions, to set a solid foundation for future growth. The company will benefit from synergies in sourcing, technology, and assembly operations across the residential and commercial security markets. It also will have the opportunity to invest in key markets to take advantage of growing trends around increased security concerns, electronics connectivity, product life-cycle costs and rapid demand growth in emerging markets.

Execution of the transaction requires further work on structure, management, governance and other matters. Management is developing detailed plans for the board’s further consideration and approval. The leadership team of the new security company will be announced prior to the completion of the spinoff. Upon completion of the spinoff, the new security company will become an independent publicly traded company.