425: TE Connectivity Plans to Change Place of Incorporation to Ireland for Financial Flexibility

TE Connectivity's board has unanimously approved a proposal to change the company's place of incorporation from Switzerland to Ireland, pending shareholder approval at a Special General Meeting in June.

Summary

• TE Connectivity intends to change its place of incorporation from Switzerland to Ireland.
• The board of directors has unanimously approved this proposal.
• The move aims to improve financial flexibility, efficiencies, and risk mitigation.
• TE Connectivity will remain registered with the U.S. Securities and Exchange Commission (SEC).
• Common shares will continue to trade on the New York Stock Exchange (NYSE) under the symbol TEL.
• Shareholders will vote on the proposal at a Special General Meeting in June.
• If approved, the change would be implemented by the end of the calendar year.
• Switzerland will remain a leadership center and hub for critical strategic and operational functions.
• The company intends to continue investing in its Swiss-based businesses.
• The company does not anticipate any material changes in its operations or financial results from this change.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive. The company is making a strategic move to improve financial flexibility, and management expresses confidence in the long-term benefits. However, there are inherent risks associated with the change in incorporation and external factors.

Positives

• The move is expected to improve financial flexibility, efficiencies, and risk mitigation.
• The company does not anticipate any material changes in its operations or financial results.
• Switzerland will continue to serve as a leadership center and hub for critical strategic and operational functions, with continued investment planned.
• The company will continue to be guided by its long-term strategy.

Risks

• The change of place 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), could negatively affect business operations.
• Conditions affecting demand for products in the automotive and other industries could pose a risk.
• Competition and pricing pressure could impact results.
• Fluctuations in foreign currency exchange rates and commodity prices could affect performance.
• Natural disasters and political, economic and military instability in countries in which the company operates could create challenges.
• Developments in the credit markets could pose a risk.
• Future goodwill impairment could negatively impact financials.
• Compliance with current and future environmental and other laws and regulations could create challenges.
• Changes in tax laws, tax treaties and other legislation could have possible effects.

Future Outlook

The company anticipates no material changes in its operations or financial results from this change. They will continue to be guided by their long-term strategy.

Management Comments

• Terrence and the leadership team are in full agreement to change our place of incorporation, stating that, this change is in the best interests of our stakeholder groups employees, customers, and shareholders.
• We will continue to be guided by our long-term strategy that enables us to win in our markets and fulfill our purpose of creating a safer, sustainable, productive, and connected future.

Industry Context

Many companies incorporate in Ireland due to its favorable tax environment and corporate laws. This move aligns TE Connectivity with other multinational corporations seeking to optimize their financial structure.

Comparison to Industry Standards

• Several large multinational corporations, such as Medtronic and Accenture, have incorporated in Ireland to benefit from its tax advantages and regulatory environment.
• These companies, similar to TE Connectivity, operate globally and seek to optimize their corporate structure for financial efficiency.
• The move to Ireland is a common strategy for companies looking to reduce their tax burden and improve their financial flexibility.

Stakeholder Impact

• The company believes this change is in the best interests of its stakeholder groups, including employees, customers, and shareholders.
• The company intends to continue investing in its Swiss-based businesses to drive further enterprise value.

Next Steps

• Shareholders will vote on the proposal at a Special General Meeting in June.
• If approved, TE would implement the change by the end of the calendar year.
• TE Connectivity plc will file a proxy statement/prospectus with the SEC that will be sent to TE shareholders.
• TE will be filing additional documents with the SEC, which contain other relevant materials in connection with the proposed change in jurisdiction of incorporation.

Key Dates