(By Balachander) Industrial conglomerate Ingersoll-Rand Plc (NYSE: IR) announced plans to spin off its commercial and residential security businesses as well as a new share repurchase program of up to $2 billion.
The Dublin-based maker of industrial and commercial products also raised quarterly dividend by 31 percent to 21 cents, payable March 28, 2013, to shareholders of record on March 12, 2013.
The spin off will result in two standalone companies: Ingersoll Rand and the new security company.
"We believe the spin-off........will allow both companies to enhance value by allocating capital and deploying resources in a more focused way, while preserving and increasing synergies within their businesses," commented CEO Michael Lamach.
Under the plan, Ingersoll Rand will have annualized revenue of roughly $12 billion on a pro forma basis based on 2011 revenue. The new security company - a combination of Ingersoll Rand's existing commercial security business and residential security business - will have annualized revenue of around $2 billion on a pro forma basis based on 2011 revenue.
Upon completion of the spin-off, Ingersoll-Rand said it will cease to have any ownership interest in the new security company, and the new security company will become an independent publicly traded company. Ingersoll-Rand expects the new security company to be an Irish plc.
Upon completion of the transaction, Ingersoll Rand and the new security company are initially expected to pay a combined quarterly dividend approximately equal in sum to the Ingersoll Rand dividend at the time of the closing.
Ingersoll-Rand expects the spin-off, which is intended to be tax free to shareholders, to be completed in roughly 12 months.
IR shares, which have been trading in the 52-week range of $29.68 to $49.31, closed at $48.69 on Friday.