425: TE Connectivity Announces Intent to Change Place of Incorporation from Switzerland to Ireland

TE Connectivity's Board of Directors has unanimously approved a proposed change of the company's place of incorporation from Switzerland to Ireland, subject to shareholder approval.

Summary

• TE Connectivity plans to change its place of incorporation from Switzerland to Ireland.
• The Board of Directors has unanimously approved the proposal.
• Shareholders will vote on the proposal at a Special General Meeting in Zurich.
• The company expects to implement the change in 2024, if approved.
• TE Connectivity does not anticipate any material change in its operations or financial results as a result of the change.
• The company will remain registered with the SEC and continue to trade on the NYSE under the symbol TEL.
• Switzerland will remain a leadership hub for strategic and operational functions.
• The company believes this change is in the best long-term interest of the company and its shareholders.
• The company has over 85,000 employees, including 8,000 engineers, working in approximately 140 countries.

Sentiment

Score: 7

Explanation: The announcement is generally positive, focusing on long-term benefits and minimal disruption. However, there are inherent risks associated with such a change, which tempers the overall sentiment.

Positives

• The company believes the change will help position TE for continued success.
• TE Connectivity does not anticipate any material change in its operations or financial results as a result of the change of domicile.
• The company will continue to be registered with the U.S. Securities and Exchange Commission (SEC) and will be subject to the same SEC reporting requirements.
• The company's common shares will continue to trade on the New York Stock Exchange (NYSE) under the symbol TEL.
• Switzerland will continue to serve as a TE leadership hub for critical strategic and operational functions.

Risks

• The change of incorporation might not be completed.
• The anticipated advantages might not materialize.
• The price of TE Connectivity's stock could decline.
• The company's position on stock exchanges and indices could change.
• Irish corporate governance and regulatory schemes could prove different or more challenging than currently expected.
• Business interruptions, such as the coronavirus disease 2019 (COVID-19) negatively affecting our business operations.
• Conditions affecting demand for products in the automotive and other industries we serve.
• Competition and pricing pressure.
• Fluctuations in foreign currency exchange rates and commodity prices.
• Natural disasters and political, economic and military instability in countries in which we operate, including continuing military conflict in certain parts of the world.
• Developments in the credit markets.
• Future goodwill impairment.
• Compliance with current and future environmental and other laws and regulations.
• The possible effects on us of changes in tax laws, tax treaties and other legislation.

Future Outlook

TE Connectivity anticipates implementing the change in 2024 and does not expect any material change in its operations or financial results as a result of the change of domicile.

Management Comments

• After careful consideration, our board of directors has determined that this change is in the best long-term interest of the company and our shareholders and will help position TE for continued success, said Chief Executive Officer Terrence Curtin.
• This move will not impact our customers or employees and we are excited to continue working together to create a safer, sustainable, productive and connected future.

Industry Context

Many companies choose to incorporate in jurisdictions with favorable tax laws and corporate governance structures. Ireland is a popular choice for US and European companies due to its relatively low corporate tax rate and access to the European Union.

Comparison to Industry Standards

• Many multinational corporations, such as Accenture and Medtronic, have chosen Ireland as their place of incorporation due to its favorable tax environment.
• The decision to re-incorporate often involves a detailed analysis of tax implications, legal frameworks, and shareholder benefits, similar to what TE Connectivity likely undertook.
• Comparable companies that have re-incorporated often cite improved access to capital and streamlined corporate governance as key drivers.

Stakeholder Impact

• Shareholders will be asked to vote on the proposed change.
• The company states that the move will not impact customers or employees.
• The company believes the change is in the best long-term interest of the company and its shareholders.

Next Steps

• Shareholders will vote on the proposal at a Special General Meeting in Zurich.
• TE Connectivity will file a proxy statement/prospectus with the SEC.
• The company expects to implement the change in 2024, if approved.

Key Dates