On Jan. 25, 2016, Johnson Controls, a global multi-industrial company and Tyco, a global fire and security provider, entered into a definitive merger agreement under which Johnson Controls will combine with Tyco to create the leader in building products and technology, integrated solutions and energy storage.
The Merger was accounted for as a reverse acquisition using the acquisition method of accounting in accordance with ASC 805, "Business Combinations” (as described in paragraph 805-10-05-4). The total fair value of consideration transferred was approximately $19.7 billion. This total is comprised of the equity value of the Tyco shares that were outstanding as of September 2, 2016 and the portion of Tyco's share awards and share options
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Goodwill has been allocated to the reporting units within Building Technologies & Solutions business based on the expected benefits from the Merger. The Company recorded a net reduction in goodwill of $258 million in fiscal 2017 related to purchase price allocations. The goodwill created in the Merger is not deductible for tax purposes.
The purchase price allocation to identifiable intangible assets acquired are as follows:
Fair Value (in million) Weighted Average life (in years)
Customer relationships 2,280 12
Completed technology 1,650 11
Other definite-lived intangibles 214 7
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Johnson Controls shareholders will own ~56% (Controlling interest) of the combined company shares (plus receive ~$3.9bn cash consideration in the merger) and Tyco will own ~44% (Non-Controlling interest) of the combined company shares.
Shareholder Consideration
Tyco will affect a reverse stock split so that Tyco shareholders will receive a fixed exchange ratio of 0.9550 shares of the combined company for each of their existing Tyco shares, and Expect EPS before special items of $0.42 vs. guidance of $0.40.
Johnson Controls shareholders will get 1 share of the combined company for each Johnson Controls share or may elect to receive cash equal to $34.88 per share. And Expect adjusted EPS of $0.82 vs. guidance of $0.80 − $0.83.
Board of Directors
The new board contains 11 directors 6 directors from Johnson Controls, 5 directors from Tyco including Alex Molinaroli (Johnson Controls Chairman and Chief Executive Officer), and George Oliver (Tyco Chief Executive Officer).