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ADT to become separate public company

by Mark Basch, Contributing Writer

Tyco International Ltd. is closing in on completion of its plan to split into three separate public companies, including a spinoff of its North American residential and small business security company ADT Corp.

The spinoff of ADT and Tyco’s flow control products business is scheduled to be completed on Sept. 28, a little more than a year after Switzerland-based Tyco announced the plan.

The newly independent ADT will be headquartered in Boca Raton, but it has a significant presence in Jacksonville.

ADT employs about 2,000 people in Jacksonville in five facilities, which include its national sales center, a call monitoring center, an account service center and a sales and service office.

The company employs a total of about 16,000 people and separated from Tyco, it would have produced revenue of $2.4 billion and net income of $300 million in the nine-month period ended June 29, according to a Securities and Exchange Commission filing.

ADT says it serves more than 6 million customers, making it the largest company of its kind in the U.S. and Canada.

All of the ADT stock will be distributed to current Tyco shareholders, who will get one ADT share for every two Tyco shares they own. After the distribution, the new stock is expected to trade on the New York Stock Exchange under the ticker symbol “ADT.”

“As an independent, publicly-traded company, we believe we can more effectively focus on and execute our objectives and satisfy the capital needs of our company,” ADT Chief Executive Officer Naren Gursahaney said in a letter to the company’s new shareholders.

“We believe this will bring more value to you as a shareholder than we could as an operating segment of Tyco. In addition, we will have the ability to offer our employees incentive opportunities linked to our performance as an independent, publicly-traded company, which we believe will further enhance employee performance,” he said.

The spinoff of Tyco’s flow control business is a bit more complicated than the ADT spinoff, as Tyco agreed in March to merge that business with publicly-traded Pentair Inc. Tyco will distribute all of the shares of the flow control business to its shareholders, and then the company will merge with Pentair. Tyco shareholders will end up owning 52.5 percent of Pentair.

After the two companies are spun off, Tyco will be left with its commercial fire protection and security business.

Cash is king at Kraft

In other spinoff news, officials of the soon-to-be-formed Kraft Foods Group Inc. are promising steadily increasing dividends for its new shareholders.

Kraft Foods Inc. is planning to split into two companies on Oct. 1: Kraft Foods Group, which will consist of the company’s North American grocery business, and Mondelez International Inc., Kraft’s current global snacks business.

Kraft Foods Group will include Maxwell House coffee, which employs about 235 people at its Downtown manufacturing plant.

With the split getting closer, the two companies held analysts meetings in Boston to update projections.

Kraft Foods Group said it expects to begin with a $2 annual cash dividend in 2013 and it targets annual dividend growth in the “mid-single digit” percentage range. It is also targeting mid-to-high single digit earnings per share growth with strong cash flow.

“Cash will be king at Kraft,” Chief Financial Officer Tim McLevish said at the meeting, according to a company news release.

“What matters to shareholders is total return and dollars in their pockets, and cash will be the fuel to grow our business,” he said.

Kraft Foods will trade on Nasdaq under the ticker symbol “KRFT.” Mondelez will trade under the symbol “MDLZ.”

Deutsche Bank planning global cuts

While Deutsche Bank is apparently still moving forward with plans to add 260 well-paying jobs in Jacksonville, its top executives in Frankfurt, Germany, last week announced a major restructuring including job cuts and reduced compensation plans.

Co-CEOs Jürgen Fitschen and Anshu Jain announced the company is targeting annual savings of 4.5 billion euros (about $5.8 billion) by 2015 to increase profits and help meet capital requirements set by banking regulators.

After announcing in July it will eliminate 1,900 jobs, Fitschen said at a news conference Tuesday that the company will cut more jobs but didn’t give details, according to Bloomberg News. Deutsche Bank employs more than 100,000 people in 74 countries.

The company also said it intends to reduce bonuses for top executives.

“Deutsche Bank aims to emerge as a long-term winner from the fundamental shifts taking place in the banking industry,” Fitschen and Anshu said in a corporate news release.

“The medium-term economic and regulatory outlook is challenging, hence we need to significantly improve our operating performance and efficiency. It is not enough to adapt our strategy to customers’ changing demands; we also have to secure our competitiveness over the long term and fulfill our responsibility to society,” they said.

Deutsche Bank last month received City Council approval for an incentive package to help expand its Southside Jacksonville offices, where it currently employs about 1,000 people. The company said it will add 260 jobs paying an average of more than $52,000 over three years.

Deutsche Bank’s media relations office did not respond to an e-mail asking if the moves announced in Frankfurt would impact its Jacksonville operations.

SunTrust sells Coke stock

Closer to home, Atlanta-based SunTrust Banks Inc. also announced a major move to help it meet capital requirements.

SunTrust announced it sold its remaining stake in The Coca-Cola Co., which it had held since 1919.

It was a sad announcement for anyone familiar with the unique relationship between SunTrust and Coca-Cola.

SunTrust’s predecessor, the Trust Company of Georgia, received the shares when it helped underwrite Coca-Cola’s initial public offering in 1919.

Not only did it become a stockholder, the bank became the guardian of one of the great corporate secrets, the original formula for making Coke. It was put in a Trust Company vault in downtown Atlanta in 1925.

However, nothing lasts forever. SunTrust began selling off its Coca-Cola stock in 2007 and reached an agreement in 2008 to sell the rest of its Coke shares in 2014 and 2015 to an unidentified party. But on Sept. 6, SunTrust said it accelerated the sale to help it raise more capital. The sale increases its capital by about $490 million.

Not only has it given up the shares, SunTrust also gave up the Coke formula. In December, the beverage maker said it moved the formula for the first time in 86 years from SunTrust to a vault in the World of Coca-Cola museum in Atlanta. It’s part of an exhibit where visitors can see the vault, but not the formula itself.

Dick’s Wings owner turns profitable

Jacksonville-based American Restaurant Concepts Inc., the franchisor of the Dick’s Wings restaurant chain, turned profitable in the second quarter with net income of $5,426.

The company’s second-quarter revenue of $106,394 was slightly higher than the first quarter, when it had a net loss of $83,848. But the company turned profitable because of a big decrease in expenses.

In its quarterly report filed last week with the SEC, American Restaurant Concepts said declines in marketing and advertising and travel expenses contributed to the big drop in general and administrative expenses.

“For us to turn the company around as quickly and substantially as we have to the point that it is now generating net income and positive cash flows from operations is a remarkable achievement. This is the first time we have accomplished either of these feats since American Restaurant Concepts became a publicly-traded company almost two years ago,” CEO Michael Rosenberger said in a news release.

General Growth says no sale

Despite the pleas of one major shareholder, General Growth Properties Inc.’s board of directors last week said it’s not interested in pursuing a sale of the company.

William Ackman of Pershing Square Capital Management LP has been publicly urging General Growth to pursue a possible merger with another regional shopping mall owner, Simon Property Group.

“After reviewing your letters and giving the matters you raised serious consideration, the board has unanimously determined that the best value for all shareholders will be achieved by GGP continuing to execute on its well-conceived business plan,” General Growth’s board said in a letter to Ackman that was filed with the SEC.

Chicago-based General Growth owns 151 regional malls, including Regency Square Mall in Jacksonville.

mbasch@baileypub.com

356-2466

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