Morgan Stanley Gives An Update On Tyco International

Morgan Stanley has taken a lot of hits today as 95%+ of its call volume is skeptical/hostile of a transaction of this size or flavor in this space. It has no knowledge of a transaction, but it does believe it is plausible and realistic to assume that Schneider would have an interest in the asset. And if not Tyco International TYC, others in the space come to mind. Schneider has been vocal about its interest in assets including bldg controls and security and has noted that big deals are a possibility. Who knows, but in the end, a strong Euro vs US$, clean B/S, and cycle visibility is a big cross border M&A catalyst. According to Morgan Stanley it's tough to say exactly what TYC would be worth but its sense is that shareholders have long been frustrated with the lagging stock and perception of “sleepy” management. Using a SOTP analysis, Morgan Stanley thinks TYC could be worth at least $55-$65 per share, with Flow being ~$15-$20 of that value. That's before cost-out and synergies. Morgan Stanley has an Overweight rating and $52 PT on TYC TYC closed Monday at $47.15