Johnson Controls Inc, a US manufacturer of car batteries and heating and ventilation equipment, is in advanced talks to buy fire protection and security company Tyco International Plc, people familiar with the matter said.
A deal between Johnson Controls and Tyco, which have market capitalisations of $23 billion and $13 billion respectively, would provide the clearest indication yet that the recent market volatility has not derailed strategic mergers from advancing.
Terms of the potential deal could not immediately be learned. The sources, who asked not to be identified because the negotiations are confidential, cautioned that no agreement was certain. The Wall Street Journal, which first reported on the talks, said a deal could be announced as early as Monday.
Johnson Controls and Tyco did not respond to requests for comment.
The deal would come as Milwaukee, Wisconsin-based Johnson Controls was preparing to spin off its automotive seating and interiors business, to focus on its building efficiency and automotive battery operations.
Johnson Controls' building efficiency segment had sales of $2.9 billion last quarter.
Based in Cork, Ireland, Tyco provides more than 3 million customers globally with fire protection and security products and services.
Tyco was broken up into three companies after turnaround expert Edward Breen took the helm from former Chief Executive Officer Dennis Kozlowski, who was convicted in 2005 of grand larceny, securities fraud and other charges.
Under Breen, Tyco spun off its electronics division, now called TE Connectivity, and the healthcare company now named Covidien PLC COV.N in 2007. He greatly expanded Tyco's security business with the $1.9 billion acquisition of Broadview Security in 2010.
In 2012, Tyco was broken up into three pieces. The flow-control business, which sells valves and controls for the energy market, merged with Pentair Inc, while the company's commercial fire and security businesses combined into "New Tyco" and traded under Tyco's symbol. The third piece consisted of the ADT North American residential security business.
Shares of Johnson Controls have fallen by over 26% since the start of 2015, while Tyco's shares have fallen by over 30% over that period.