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Williams, Tyco deal pulled
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July 13, 1999: 10:27 a.m. ET
Fire protection groups terminate $5.8B merger talks for second time
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LONDON (CNNfn) - U.K. security products group Williams and U.S. conglomerate Tyco International terminated talks over a $5.8 billion merger Tuesday.
Williams (WLMS), owner of household brand names such as Chubb and Yale, saw its shares plummet more than 13 percent to 361 pence in London trade Tuesday.
The two companies announced they were in talks on June 7, but the lack of a further announcement gave rise to growing suspicion that a deal could not be agreed upon.
This is the second time merger negotiations between the two have fallen through. Talks last year also ended without agreement.
Williams blamed "regulatory uncertainty" and the difficulty of achieving immediate cost savings for blocking a deal.
Tyco Chief executive Officer Dennis Kozlowski said in a statement, "While there were substantial potential synergies with Williams…we were unable to structure a transaction that would have achieved these benefits for Tyco (TYC) shareholders."
Separately, both companies claimed their existing independent business would perform strongly on a stand-alone basis.
"Normally these things fail on either management issues or price," said Zafar Khan, analyst at Credit Lyonnais Securities.
Press reports had suggested that price was the sticking point, with Williams looking for an offer of about 500 pence per share, valuing the group around 3.7 billion pounds ($5.8 billion). Tyco indicated a willingness to pay something closer to 460 pence a share, according to analysts.
Khan said Williams "is still in play", and had proved it was willing to listen to offers, although he pointed out that the group's admission of a "modest degree of dislocation," was in fact a veiled profit warning.
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