EmailIngersoll-Rand (IR $49.85 +1.16) announced its Board unanimously approved a plan to spin off its commercial and residential security businesses. The separation will result in two standalone companies: Ingersoll Rand, and the new security company. IR expects the spin-off, which is intended to be tax free to shareholders, to be completed in approximately 12 months. Following the separation, the company will have annualized revenue of approximately $12 billion on a pro forma basis based on 2011 revenues. The company is expected to maintain a strong balance sheet and financial policies consistent with an investment grade credit rating.
The company also announced a revised capital structure and allocation strategy designed to improve efficiency and return additional capital to shareholders through the following actions authorized by the Board of Directors:
- An increase in the level of overall indebtedness and leverage ratio while still preserving a solid investment grade credit rating.
- A new share repurchase program of up to $2 billion of the company's ordinary shares. The share repurchase program will begin in 2013, with an expected completion in the first quarter of 2014. The timing of the program will be dependent on the company's access to the capital markets, available liquidity and cash flow, and general market conditions. The repurchase program may be executed through various methods, including open market repurchases.
- The declaration of a quarterly dividend of 21 cents per ordinary share, reflecting an increase of 31%. The dividend is payable March 28, 2013, to shareholders of record on March 12, 2013.
