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How Do Johnson Controls and Tyco Products Complement Each Other?

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Jan. 30 2016, Updated 6:06 a.m. ET

Johnson Controls’ product portfolio

Excluding the to-be-spun-off automotive segment, Johnson Controls (JCI) offers products and services in the following key areas:

  • Power Solutions: Johnson Controls is the world leader in automotive power solutions and battery technology. The Power Solutions segment clocked $6.6 billion in revenues in fiscal 2015. The segment has been the company’s growth driver over the past few years with revenue CAGR (compounded annual growth rate) of 8.7% and operating income CAGR of 19% since fiscal 2009. Power Solutions is also the company’s most profitable business in terms of operations (margins of 17.5% in fiscal 2015) as well as return on assets. The company competes with Exide Technologies in this segment.

  • Building Efficiency: Johnson Controls’ Building Efficiency segment designs, manufactures, installs, and services HVAC (heating, ventilation, and air-conditioning) and other control systems that add to building efficiency and safety. Eaton (ETN), Honeywell International (HON), and Ingersoll-Rand (IR) also offer products and services in this area. The segment reported $10.5 billion in revenues in fiscal 2015 with an operating margin of 8.8%.
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Tyco International’s product portfolio

Tyco International (TYC) offers products and services related to electronic security and fire safety. Since most of these products are used in buildings and premises, they complement the product and services offered by Johnson Control’s (JCI) Building Efficiency segment. With the addition of Tyco’s product portfolio, the combined entity will be able to offer integrated products and services in building efficiency, security, and safety. Both Tyco International and Johnson Controls are part of the SPDR S&P 500 ETF (SPY).

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