What Will Be The Effect On The Segment Operating Margin As A Result Of The Johnson Controls-Tyco Merger?

Both Johnson Controls (NYSE:JCI) and Tyco in the past have shed their lower-margin businesses in order to focus on its building systems. While Tyco split into three units in 2012, spinning off the ADT security company and Pentair, a valve maker, Johnson Controls is in the midst of spinning off its Automotive Experience business, which makes car interiors. Similar to those deals, this agreement is being conducted to focus on the higher-margin businesses. While JCI will benefit financially as a result of lower taxes, from the inversion deal in which the tax base will be moved to Ireland, strategically the company will become a building controls behemoth, with the combination of JCI’s HVAC system and Tyco’s fire and security system. Tyco’s higher margins will be beneficial to JCI, and the combined company will be able to further improve margins in the future by bringing together the two groups’ technologies.

Have more questions on Johnson Controls? See the links below:

• What Are The Benefits Johnson Controls Will Attain From The Tyco Merger?
• What Will Be Johnson Controls’ Revenue Composition Post The Tyco Merger?
• Why Did The SG&A Expenses For Johnson Controls Increase In The First Half Of FY 2016?
• How Did Johnson Controls’ Segments Perform in Q2 2016?
• Will The U.S. Treasury Department Rules, That Killed The Pfizer-Allergan Deal, Affect Johnson Controls-Tyco Merger?
• Johnson Controls’ Earnings Beats Expectations
• Will Johnson Controls Miss Estimates Again?
• How Has Johnson Controls’ Net Sales Changed By Geographic Areas?
• How Does The Adient Spin-Off And Tyco Merger Create Value For Johnson Controls’ and Tyco’s Shareholders?
• What Costs Did Johnson Controls’ 2015 Restructuring Plan Entail?
• Johnson Controls: Year 2015 In Review
• How Will Johnson Controls’ Revenue And EBITDA Composition Change In The Next 3 Years?
• What’s Johnson Controls’ Fundamental Value Based On Expected 2016 Results?
• What’s Johnson Controls’ Revenue And EBITDA Breakdown?

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