Acquisition-minded Tyco International Ltd. appears on track to buy connector giant AMP Inc. for $11.3 billion in stock and, separately, polyethylene film processor Sunbelt Manufacturing Inc. for $85 million in cash. Tyco disclosed both deals Nov. 23.
Tyco and AMP announced a definitive agreement involving a tax-free, all-stock transaction. If AMP shareholders approve the deal, they will receive 0.7839 of a Tyco share for each AMP share. Tyco and AMP boards have approved the white knight agreement.
Since early August, AMP has been fending off AlliedSignal Inc.'s hostile takeover bid.
AlliedSignal left its offer in place, but appeared unwilling to raise the stakes.
``The price being paid by Tyco clearly exceeds the value we place on AMP,'' Lawrence A. Bossidy, AlliedSignal chairman and chief executive officer, said in a statement.
AlliedSignal of Morristown, N.J., had bid $10 billion in cash for AMP.
AMP of Harrisburg, Pa., makes electronic, electrical and electro-optic connection devices, interconnection systems and connector-intensive assemblies. AMP, a market leader, supplies parts for personal computers, cable television systems, appliances and tools. Recent economic difficulties had made AMP vulnerable to a takeover.
AMP had 1997 sales of $5.75 billion. Including AMP, Tyco projects fiscal 1999 sales of more than $22 billion.
In a separate deal, Tyco said it has entered a definitive agreement to buy Sunbelt Manufacturing, which makes and distributes plastic sheeting and trash bags through Sunbelt Plastics of Monroe, La.
Tyco reached the agreement with Sunbelt founders David J. Cattar and Saul Mintz and 50 percent-owner U.S. Equity Partners LP, a private equity fund that acquired the interest in exchange for a mid-1997 cash infusion. Wasserstein Perella & Co. Inc., a New York investment bank, manages U.S. Equity.
Subject to regulatory approval, the transaction is expected to close by the end of 1998.
Sunbelt Plastics employs more than 400, runs 34 extrusion lines, converts about 160 million pounds of resin annually and projects 1998 sales of about $105 million. It placed 50th in Plastics News' ranking of North American film and sheet manufacturers.
The product line includes more than 600 stock items, including a variety of PE can liners; construction, agriculture and consumer film and sheeting materials; and drop cloths for painting and specialty applications.
Sunbelt Plastics will report within Tyco's plastics and adhesives group. The acquisition will increase Tyco's resin processing to more than 1 billion pounds a year, and ``improves our competitive market position in the areas of plastic sheeting and institutional can liners,'' L. Dennis Kozlowski, Tyco chairman and CEO, said in a news release.
``Sunbelt's combination with Tyco Plastics and Adhesives will result in an immediate positive impact on our earnings,'' he said.
Currently, that group includes protective packaging maker Ludlow Laminating and Coating, polyethylene film producer Armin Plastics and trash bag manufacturer Carlisle Plastics Inc.
Tyco, based in Exeter, N.H., is a diversified conglomerate with operations in disposable medical supplies, fire detection and suppression systems and flow-control products, and electrical and electronic components.
Tyco has been hot on the acquisition trail, buying businesses for an aggregate of $3.42 billion in the nine months ended June 30.
Before the AMP deal, Tyco had moved to acquire security service providers ADT Ltd. and Borg-Warner Security Corp.'s Wells Fargo Alarm; medical products suppliers U.S. Surgical Corp., American Home Products Corp.'s Sherwood-Davis & Geck and Bessemer Holdings LP's Graphic Controls Corp.; industrial valve maker Keystone International Inc.; and the undersea fiber-optic cables unit of AT&T Corp.