Ed Breen Sets a New Course for Tyco

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David Yost, CEO of AmerisourceBergen. "Ed has none of that."

Breen spent much of his career in the cable industry. He led General Instrument, a maker of set-top boxes, before selling it to Motorola (MOT) for $17 billion in 2000. He was president of Motorola, itself in the midst of a turnaround, when he suddenly quit in 2002 to rescue Tyco. "He said: 'If I can fix this, I could give something back to American business,' " recalls Frank M. Drendel, chairman and CEO of telecommunications company CommScope (CTV) and a longtime mentor to Breen.

Breen walked in to find a company crippled by the scandal, massive debt—$11 billion of which was coming due—and an obsession with deals. "I banned the word 'acquisition' when I came," says Breen. "Tyco was acquisitions on steroids." Jim Spicer, president of Tyco's SimplexGrinnell fire protection business, is the only member of the senior team from the Kozlowski era. "What Ed has brought to the table is visibility, stability, vision, and a sense of purpose," he says.

SMALLER SANDBOX

In 2006, Breen broke up the company, spinning off Tyco Electronics—which makes electronic connectors—and health-care products unit Covidien, both of which had strong balance sheets. Breen kept what was left, a $17 billion business that includes security (ADT Worldwide and now Broadview), fire protection, and "flow control" (valves and such). "Not a lot of managers willingly make their sandbox smaller," says Tyco's Arditte. Soon after, friends and colleagues began to wonder whether Breen "would have the same interest in a smaller company," says lead director Bruce Gordon. "And he did. His ego is not wrapped up in revenues."

Despite Tyco's improved health, Breen has lately faced challenges. The financial crisis sent sales down 15% last year and prompted Breen to lay off about 7,000 of 113,000 employees. Analysts don't much like Tyco's $1.4 billion electrical and metal products business, because it is tied to volatile steel prices and commercial construction, adding a big gust of unpredictability to a company that now prides itself on stability. And given its history of ignominious acquisitions, the notion of Tyco jumping into a series of big deals may be off-putting to some. "You can imagine how skeptical people would be," says Winoker of Sanford C. Bernstein.

Breen is committed to converting investors, one deal at a time. "Every deal we do has to make sense strategically and financially," he says. "We've got a strong balance sheet, and I'm never going to let that change."

Brady is senior editor at Bloomberg Businessweek in New York.

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