Moody’s reviews Tyco International

Moody's Investors Service said it placed the A3 senior unsecured and provisional A3 unsecured shelf ratings assigned to Tyco International Finance SA on review for possible downgrade following the Jan. 25 announcement that Tyco International plc (unrated) and Johnson Controls, Inc. agreed to merge.

The P-2 short-term rating is unaffected.

According to the merger announcement, Johnson Controls will be merged into a subsidiary of Tyco and Tyco International plc will change its name to Johnson Controls plc. This approach will provide the combined company an Irish tax domicile. Johnson Controls' shareholders will control 56% of the shares of the new company; Tyco shareholders' the balance.

The companies expect the merger to occur by the end of their respective fiscal fourth quarters, both of which end Sept. 30, 2016. Moody's expects the review could extend up to the merger's closing.

The review will focus on: (a) the projected earnings and cash flow profiles of the post-merger operations (b) the post-closing debt-capital and legal entity structure; and (c) the new company's financial policies including debt leverage targets and the expected application of free cash flow.

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