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News
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Tyco down on disclosures
graphic January 29, 2002: 4:09 p.m. ET

Conglomerate paid director for arranging buy of CIT, in which he owned stock.
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  • GE interested in Tyco units - Jan. 28, 2002
  • Tyco to split into four - Jan. 22, 2002
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  • Tyco
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    NEW YORK (CNN/Money) - Tyco International stock fell on the disclosure the company had compensated one of its directors for arranging the conglomerate's acquisition of the CIT Group, a company in which the director held stock.

    Tyco (TYC: down $8.35 to $33.65, Research, Estimates) said it paid Frank E. Walsh Jr., a director, a $10 million fee and contributed another $10 million to a charity he controls for helping to arrange the company's acquisition of The CIT Group, Inc., now Tyco Capital Corp.

    At the time, Walsh owned 50,000 shares of stock in The CIT Group Inc. that were converted in the deal to 34,535 Tyco common shares, using the same exchange ratio provided to other CIT shareholders, Tyco said. Tyco made the disclosure in a proxy statement filed Monday with the Securities and Exchange Commission.

    Tyco Chairman L. Dennis Kozlowski said in a statement he believes the reaction of the stock price is unjustified.

    "The board felt that fee was appropriate in light of Mr. Walsh's efforts," Kozlowski said.

    The company, an industrial conglomerate headquartered in Bermuda, has followed a growth-through-acquisitions strategy in recent years so aggressive that Kozlowski had earned the nickname "Deal-a-day Dennis" in Wall Street's merger-and-acquisition circles.

    But the company said Jan. 22 it would split up into four separate companies because complaints that its accounting was difficult to understand, particularly in relation to acquisitions, became increasingly difficult to answer in the midst of the Enron (ENRNQ: Research, Estimates) bankruptcy, which followed questions about accounting.

    "Clearly we are in an environment where people are intensely skeptical of corporate America, and for that matter, of Tyco," Kozlowski said. "As we have said before, we are prepared to openly discuss whatever legitimate questions or concerns our shareholders, the analyst community or the media may have."

    Investors are particularly worried right now about disclosures of possible conflicts of interest for those that control corporations because of the Enron situation, which also has raised questions of conflicts of interest. graphic

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      RELATED STORIES

    GE interested in Tyco units - Jan. 28, 2002

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    Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.

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