Tyco Buying Raychem for $2.87 Billion
May. 19, 1999
MENLO PARK, Calif. (AP) _ Tyco International Ltd. said Wednesday it will buy Raychem Corp. for about $2.87 billion in cash and stock, in a bid to strengthen its position as a leading electronics supplier to the telecommunications and automotive industries.
Raychem, a designer, manufacturer and distributor of electronic components which had 1998 revenue of $1.8 billion, would merge with a subsidiary of Bermuda-based Tyco, which expects to have more than $22 billion in revenue this year.
Tyco International is a diversified manufacturing and service company with operations in more than 80 countries around the world.
It is a leader in making fire protection systems and providing electronic security services. It also makes and services electrical and electronic components and underwater telecommunications systems and makes flow control valves, disposable medical products and plastics and adhesives.
The boards of both companies have unanimously approved the transaction.
Investors seemed to like the combination. Raychem stock shot up more than 16 percent, or $5.12 1/2, to close at $36.25 on the New York Stock Exchange, while Tyco shares closed up more than 4 percent, or $4.12 1/2, at $93.50 also on the NYSE.
Raychem shareholders would get about $37 a share for their stock under terms of the deal. That includes about $1.4 billion in cash and 16.1 million newly issued Tyco shares.
Richard A. Kashnow, chairman and chief executive of Raychem, said the deal will ``result in an expanded set of offerings for our customers'' and enable both companies to grow faster.
Separately, the Spanish telecommunications company Telefonica SA said Wednesday that it has sold its underwater-cable unit, Temasa, to a unit of Tyco International for about $280 million.
Temasa specializes in installing and maintaining fiber-optic cables on the ocean floor. The Tyco unit, Tyco Submarine Systems Ltd., specializes in servicing underwater cables.
Spain's former telecommunications monopoly said the deal strengthens its links with Tyco. Last week, the companies signed a $900 million project to link South America, Central America and the U.S. through a network of underwater cables.