The $3 Billion Haircut

Tyco Nears Sale of Plastics Unit To Apollo Advisors for $1 Billion —Wall Street Journal It’s official!

Almost four years after first being promised to Wall Street’s Finest by the now-convicted ex-CEO and CFO of Tyco, the sale of Tyco’s plastics business looks set to happen.

The $1 billion reported purchase price, however, is $3 billion lower than the high end of the range promised by Dennis and Mark on January 22, 2002 at the New York analyst meeting announcing the proposed split-up of the conglomerate they had spent years smooshing together through serial acquisitions, showering millions of dollars worth of fees on the very same firms whose analysts were loudly touting a hodge-podge of unrelated stuff as “The Next GE.”

Current Tyco CEO Ed Breen, the widely hailed ex-Motorola turnaround “star” whose turnaround efforts at Motorola are being quickly undone by his successor Ed Zander, has not gotten very far creating value here.

And if the collapse in the value of the plastics division over the last four years is any indication, he may not get much further.

Jeff Matthews I Am Not Making This Up © 2005 Jeff Matthews

The content contained in this blog represents the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations.