UPDATE: JCI Buys Tyco International, Moves HQ to Ireland

Johnson Controls Inc. confirms it has entered into a definitive merger agreement with fire protection and security systems provider Tyco International plc. The pending deal was reported last weekend by The Wall Street Journal.

The purchase will create a new company called Johnson Controls plc that is based at Tyco’s current headquarters in Cork, Ireland. The maneuver, called a tax inversion, will enable the new company to lower its corporate taxes by about $150 million per year, according to JCI.

The new company’s North American operational headquarters will be at JCI’s current offices in Milwaukee, with shares traded under the JCI ticker on the New York Stock Exchange. The companies haven’t said what will happen to Tyco’s U.S. headquarters in Princeton, N.J., but the companies anticipate annual savings of $500 million.

Current JCI shareholders will own about 56% of the new company and receive an aggregate cash consideration of $3.9 billion. Tyco shareholders will own the remainder. The companies expect to complete the merger by the end of September.

JCI also says it expects to complete the previously announced spinoff of its automotive interiors business under the name Adient by October. The unit will be headed by Bruce McDonald, currently JCI’s vice chairman.

JCI CEO Alex Molinaroli says the Tyco acquisition and auto interiors spinoff mark the latest phase in the company’s efforts to become a more broadly based multi-industry company. Johnson Controls plc will retain its automotive starter battery business.

Molinaroli will remain as chairman and CEO of the new company. Tyco CEO George Oliver will be president and chief operating officer for 18 months after the merger is completed. He then will become CEO. Molinaroli will turn over the chairmanship to Oliver a year later.