By MIA LAMAR
Tyco International struck a deal with Pentair to merge the maker of water treatment and storage systems with its pipes and valves unit, valuing the business at roughly $4.5 billion.
The deal, if approved by shareholders, would see Tyco own roughly 52.5% of the combined company and Pentair own about 47.5%.
The new company is expected to take the Pentair name and be led by Randall J. Hogan, Pentair's current chairman and chief executive.
Shares of Pentair jumped 11% to $44.61 in premarket trade on the report. Tyco shares were inactive from their Tuesday close at $53.53.
Tyco in September unveiled plans to split itself into three publicly traded companies devoted to home security, pipes and valves, and fire protection, putting it among a string of large US companies that have decided the sum of their parts is worth more than the whole.
"This transaction provides compelling value for Tyco shareholders through ownership in a combined company with earnings and cash flow prospects that are greater than an independent, publicly traded Tyco Flow," Tyco CEO Ed Breen said Wednesday.
Tyco noted that it continues to expect to complete its full separation plans by the end of September.
The company's fiscal first-quarter earnings reported in January showed a 49% slump in profit as results took a hit from costs tied to its planned separations.
Pentair has seen recent results boosted by sales in emerging markets though it has more recently warned of higher costs and softer-than-expected sales weakening the bottom line.
In May, the company completed its acquisition of Clean Process Technologies for about $705 million, a move that was expected to increase Pentair's exposure to emerging markets.
Dow Jones Newswires