Tyco International Ltd shareholders and analysts expect the conglomerate to sell rather than spin off its finance unit to ease concerns that the company faces a cash crunch.
"You will definitely see parts of the business sold," said William D'Alonzo, chief investment officer at Friess Associates Inc, which oversees US$6.2 billion in assets and sold 3.9 million Tyco shares in January. "The company can reap greater shareholder value now that way."
A sale might fetch at least US$6 billion to reduce some of the US$11 billion in debt Tyco planned to eliminate as it splits into four companies, analysts said. Chief Executive Dennis Kozlowski canceled a share sale Wednesday for the finance business and said he would consider offers for all Tyco's units. Kozlowski is accelerating the breakup to halt a slide in Tyco's shares.
"If the unit is spun off to shareholders 100 percent and no cash results, there would probably be a negative impact," said George Meyers, an analyst at Moody's Investors Service Inc, which is reviewing Tyco's "Baa1" credit rating.
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