Merger Q&A

The following are answers to certain questions you may have regarding the Johnson Controls Tyco merger. Please refer to the full Form S-4 document for further questions and answers and more detailed information. Click here for the full Form S-4.

Q: WHAT IS THE PROPOSED TRANSACTION?

A: On January 24, 2016, Johnson Controls and Tyco entered into the merger agreement pursuant to which they agreed to combine their respective businesses under a single company.

The merger is structured as a “reverse merger,” in which Johnson Controls will merge with an indirect wholly owned subsidiary of Tyco, with Tyco being the parent entity of the combined company. Following the merger, Tyco will change its name to “Johnson Controls plc” and is referred to as the “combined company.” In the merger, each share of Johnson Controls common stock (other than certain shares described in the merger agreement) will be converted into, at the election of the holder of such share, either: (i) one ordinary share of the combined company (the “share consideration”); or (ii) $34.88 in cash, without interest (the “cash consideration”). Elections by Johnson Controls shareholders for the share consideration and the cash consideration will be subject to proration procedures set forth in the merger agreement, such that Johnson Controls shareholders will receive in the aggregate approximately $3.864 billion in cash.

Immediately prior to the merger, Tyco shareholders will receive 0.955 ordinary shares of Tyco, which will become ordinary shares of the combined company in the merger, for each Tyco ordinary share they hold. Tyco shareholders will receive these shares by virtue of a 0.955-for-one share consolidation (the “Tyco share consolidation”). After consummation of the merger, Johnson Controls shareholders and Tyco shareholders are expected to own approximately 56% and 44%, respectively, of the issued and outstanding ordinary shares of the combined company. Back to top

Q: WHAT WILL JOHNSON CONTROLS SHAREHOLDERS RECEIVE IN THE MERGER?

A: In the merger, each share of Johnson Controls common stock issued and outstanding immediately prior to the effective time of the merger (other than shares held by Johnson Controls, Tyco, Merger Sub and certain subsidiaries of Johnson Controls and Tyco, as described in the merger agreement) will be converted into the right to receive, at the election of its holder (subject to proration as described in this joint proxy statement/prospectus), either:

·one ordinary share of the combined company; or
$34.88 in cash, without interest.

The share consideration and the cash consideration are collectively referred to as the “merger consideration.” Any share of Johnson Controls common stock with respect to which a holder elects to receive the share consideration is referred to as a “share electing share,” and any share of Johnson Controls common stock with respect to which a holder elects to receive the cash consideration is referred to as a “cash electing share.” If a holder makes no election with respect to a share (or fails to properly make an election) (a “non-electing share”), then such share of Johnson Controls common stock will be deemed to be a share electing share.

Elections by Johnson Controls shareholders for the share consideration and cash consideration will be subject to proration procedures set forth in the merger agreement, such that Johnson Controls shareholders will receive in the aggregate approximately $3.864 billion of cash. As a result, an aggregate of approximately 110,778,083 shares of Johnson Controls will receive the cash consideration. Accordingly, if you are a Johnson Controls shareholder, depending on the elections made by other Johnson Controls shareholders, you may not receive the amount of cash or the number of shares of the combined company that you request on your election form. Back to top

Q: ARE JOHNSON CONTROLS SHAREHOLDERS GUARANTEED TO RECEIVE THE FORM OF MERGER CONSIDERATION THEY ELECT TO RECEIVE?

A: No. Elections by Johnson Controls shareholders for the share consideration and cash consideration will be subject to proration procedures set forth in the merger agreement, such that Johnson Controls shareholders will receive in the aggregate approximately $3.864 billion in cash. The merger agreement provides for adjustments to and reallocation of the share elections and cash elections made by Johnson Controls shareholders in the event that the cash consideration is undersubscribed or oversubscribed.

Specifically, if Johnson Controls shareholders elect an aggregate of $3.864 billion, cash electing shares will be converted into the right to receive cash consideration and share electing shares and non-electing shares will be converted into the right to receive share consideration. If Johnson Controls shareholders elect to receive an aggregate of less than $3.864 billion of cash consideration, cash electing shares will be converted into the right to receive cash consideration and a portion of the share electing shares and non-electing shares of each Johnson Controls shareholder will be converted into the right to receive cash consideration, with the remaining shares of such Johnson Controls shareholder converted into the right to receive share consideration. If Johnson Controls shareholders elect to receive an aggregate of more than $3.864 billion of cash consideration, share electing shares and non-electing shares will be converted into the right to receive share consideration, and a portion of the cash electing shares of each Johnson Controls shareholder will be converted into the right to receive cash consideration, with the remaining shares of such Johnson Controls shareholder converted into the right to receive share consideration. Accordingly, depending on the elections made by other Johnson Controls shareholders, each Johnson Controls shareholder who elects to receive share consideration for all of their shares of Johnson Controls common stock in the merger may receive a portion of their merger consideration in cash consideration, and each Johnson Controls shareholder who elects to receive cash consideration for all of their shares of Johnson Controls common stock in the merger may receive a portion of their merger consideration in share consideration. A Johnson Controls shareholder who elects to receive a combination of cash consideration and share consideration for their shares of Johnson Controls common stock in the merger may receive cash consideration and share consideration in a proportion different from that which such shareholder elected. For further information, including hypothetical scenarios demonstrating the possible effects of proration on a holder of 1,000 shares of Johnson Controls common stock, see “The Merger—Consideration to be Received by Johnson Controls Shareholders.” Back to top

Q: WHEN WILL THE MERGER BE CONSUMMATED?

A: The parties currently expect that the merger will be consummated by the end of the 2016 fiscal year (which ends on September 30, 2016 for both Johnson Controls and Tyco), but neither Johnson Controls nor Tyco can predict the actual date on which the merger will be consummated, or whether it will be consummated, because the merger is subject to factors beyond each company’s control, including whether or when the required regulatory approvals will be received. See “The Merger Agreement—Conditions to the Consummation of the Merger.” Back to top

Q: WHAT ARE THE CONDITIONS TO THE CONSUMMATION OF THE MERGER?

A: In addition to approval of the Johnson Controls merger proposal by Johnson Controls shareholders and approval of the Tyco required proposals by Tyco shareholders, consummation of the merger and the other transactions contemplated by the merger agreement is subject to the satisfaction of a number of other conditions, including certain regulatory clearances. See “The Merger Agreement—Conditions to the Consummation of the Merger.” Back to top

Q: WHAT ARE THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE TRANSACTION TO JOHNSON CONTROLS SHAREHOLDERS?

A: The receipt of ordinary shares of the combined company and/or cash in exchange for Johnson Controls common stock pursuant to the merger will be treated as a taxable transaction for U.S. federal income tax purposes. A U.S. holder (as defined under “Certain Tax Consequences of the Merger—U.S. Federal Income Tax Considerations”) of Johnson Controls common stock will generally recognize taxable gain or loss equal to the difference between (i) the sum of the fair market value of the ordinary shares of the combined company and the amount of cash (including any cash received in lieu of fractional ordinary shares of the combined company), in each case, received in the merger and (ii) the U.S. holder’s adjusted tax basis in the shares of Johnson Controls common stock surrendered in exchange therefor.

In certain circumstances, Section 304 of the Internal Revenue Code of 1986, as amended (the “Code”), could cause a holder of Johnson Controls common stock that also owns, directly or constructively, Tyco ordinary shares immediately prior to the merger to be treated as receiving a dividend in an amount up to the fair market value of the total consideration received by such holder in the merger, regardless of such holder’s gain or loss on its Johnson Controls common stock. Non-U.S. holders (as defined under “Certain Tax Consequences of the Merger—U.S. Federal Income Tax Considerations”) of Johnson Controls common stock may be subject to U.S. withholding tax with respect to any consideration received in the merger.

Holders of Johnson Controls common stock should read the section entitled “Certain Tax Consequences of the Merger—U.S. Federal Income Tax Considerations” for a more complete discussion of the U.S. federal income tax consequences of the merger. Tax matters can be complicated, and the tax consequences of the merger to a particular holder of Johnson Controls common stock will depend on such holder’s particular facts and circumstances. Holders of Johnson Controls common stock should consult their own tax advisors to determine the specific tax consequences to them of the merger. Back to top

Q: WHAT HAPPENS IF THE MERGER IS NOT CONSUMMATED?

A: If the merger is not consummated, Johnson Controls shareholders will not receive the merger consideration for their shares of Johnson Controls common stock, and Tyco ordinary shares will not be subject to the Tyco share consolidation. Instead, Johnson Controls and Tyco will remain independent public companies and their shares of common stock or ordinary shares, respectively, will continue to be listed and traded on the NYSE. Under specified circumstances, Johnson Controls or Tyco (or its indirect wholly owned subsidiary) may be required to pay to, or be entitled to receive from, the other party a fee or reimbursement of expenses with respect to the termination of the merger agreement, as described under “The Merger Agreement—Termination of the Merger Agreement; Termination Fees; Expense Reimbursement.” Back to top

Q: HOW WILL MY JOHNSON CONTROLS EQUITY AWARDS BE TREATED?

A: Treatment of Johnson Controls Equity-Based Awards

Stock Options. Each option to purchase shares of Johnson Controls common stock that is outstanding and unexercised as of immediately prior to the effective time of the merger will be assumed by the combined company and converted into an option to acquire a number of combined company ordinary shares equal to the number of shares of Johnson Controls common stock subject to such Johnson Controls option, at an exercise price per combined company ordinary share equal to the exercise price per share of Johnson Controls common stock of such Johnson Controls option. Each combined company option as so assumed and converted will continue to have, and will be subject to, the same terms and conditions as applied to the Johnson Controls option immediately prior to the effective time of the merger, including accelerated vesting upon specified qualifying terminations of employment. See “The Merger—Interests of Johnson Controls’ Directors and Executive Officers in the Merger.”

Stock Appreciation Rights. Each stock appreciation right in respect of shares of Johnson Controls common stock that is outstanding and unexercised as of immediately prior to the effective time of the merger will be assumed by the combined company and converted into a share appreciation right in respect of a number of combined company ordinary shares equal to the number of shares of Johnson Controls common stock subject to such Johnson Controls stock appreciation right, at an exercise price per combined company ordinary share equal to the exercise price per share of Johnson Controls common stock of such Johnson Controls stock appreciation right. Each combined company share appreciation right as so assumed and converted will continue to have, and will be subject to, the same terms and conditions as applied to the Johnson Controls stock appreciation right immediately prior to the effective time of the merger, including accelerated vesting upon specified qualifying terminations of employment. See “The Merger—Interests of Johnson Controls’ Directors and Executive Officers in the Merger.”

Restricted Stock Awards. Each Johnson Controls restricted stock award that is outstanding as of immediately prior to the effective time of the merger will be assumed by the combined company and converted into a combined company restricted share award with respect to a number of combined company ordinary shares equal to the number of shares of Johnson Controls common stock subject to such Johnson Controls restricted stock award. Each combined company restricted share award as so assumed and converted will continue to have, and will be subject to, the same terms and conditions as applied to the Johnson Controls restricted stock award immediately prior to the effective time of the merger, including accelerated vesting upon consummation of the merger (for Johnson Controls restricted stock awards granted under the Johnson Controls, Inc. 2001 Restricted Stock Plan) and accelerated vesting upon specified qualifying terminations of employment (for other Johnson Controls restricted stock awards). See “The Merger—Interests of Johnson Controls’ Directors and Executive Officers in the Merger.”

Restricted Stock Unit Awards. Each Johnson Controls restricted stock unit award that is outstanding as of immediately prior to the effective time of the merger will be assumed by the combined company and converted into a combined company restricted share unit award with respect to a number of combined company ordinary shares equal to the number of shares of Johnson Controls common stock subject to such Johnson Controls restricted stock unit award. Each combined company restricted share unit award as so assumed and converted will continue to have, and will be subject to, the same terms and conditions as applied to the Johnson Controls restricted stock unit award immediately prior to the effective time of the merger, including accelerated vesting upon specified qualifying terminations of employment. See “The Merger—Interests of Johnson Controls’ Directors and Executive Officers in the Merger.” Back to top