Tyco Headquarters to Shift to Ireland - Analyst Blog

Responding to recent Swiss law changes that define ceilings on executive pay and toughen immigration regulations, the Board of Directors of security systems maker Tyco International Ltd. TYC has approved a plan to transfer of its headquarters from Switzerland to "business friendly" Ireland.

Pending shareholder approval, the relocation of the company's place of incorporation is expected to wrap up before the end of the calendar year.

Switzerland's Minder Initiative

Switzerland, famed for its favorable tax structure, stable politics and business friendly laws, has recently affected changes in its regulatory environment that are of mounting concern to the business community.

Per a proposal known as the Minder Initiative, the authorities have imposed tough corporate governance regulations on Swiss companies. The new laws direct shareholders of public companies to vote for caps on executive pay and prohibit undue compensation schemes for new and departing managers.

Consequently, Ireland is turning out to be a favored destination for companies seeking new tax domiciles.
    
Tyco's Move

According to Tyco, these proposals restrict its capacity to reap the benefits of managerial talent, thus harming its competitiveness and jeopardizing shareholder interests.

After careful consideration, the Board determined that Ireland has a comparatively more stable business environment than Switzerland, which will be favorable for Tyco's operations. Moreover, its validated legal and regulatory framework and corporate governance standards will be highly conducive to Tyco's business, and will aid in maximizing shareholder welfare over the long term.

The move is expected to be tax-neutral and will not have a material effect on financial results in the near term.

Tyco which already has operations in Ireland, believes this move hopes to assist in a strategic expansion of Tyco's footprint in the European island.

Tyco currently holds a Zacks Rank #4 (Sell). Other stocks in the Diversified Operations industry that are worth considering include Federal Signal Corp. FSS, Icahn Enterprises, L.P. IEP and Noble Group Ltd. (NOBGY). All of these stocks carry a Zacks Rank #1 (Strong Buy).