Tyco down on disclosures
|
|
January 29, 2002: 4:09 p.m. ET
Conglomerate paid director for arranging buy of CIT, in which he owned stock.
|
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.
Click here to send mail to Victoria Zunitch
|
|
|
|
|
|