* Deal would create world's largest security systems maker
* Early leaks could make deal less likely - report
* Tyco shares rise sharply, then ease a little
(Adds CNBC report, share movement, background)
NEW YORK, April 12 French engineering giant
Schneider Electric (SCHN.PA) has sent a letter outlining its
interest in a $30 billion takeover of Tyco International Ltd
TYC.N to create the world's leading maker of security
systems, the Daily Telegraph newspaper reported on its website
Tyco shares rose nearly 4 percent on Monday, after
Bloomberg reported a possible takeover offer from Schneider.
The shares rose a further 7 percent on Tuesday.
CNBC reported after the close of trading on Tuesday that
early stage leaks about the talks had made a deal less likely,
and Tyco shares eased back about 1 percent to $51.95 in
The Tyco board has allowed the start of due diligence,
according to the Telegraph report, which cited unnamed sources.
However, it said Tyco is thought to be unwilling to accept an
offer at less than $65 a share from Schneider.
A Tyco spokesman had no comment. Schneider could not
immediately be reached outside normal business hours.
To get a deal done, Schneider might be willing to give Tyco
CEO Edward Breen a seat on the board of the combined company,
the Telegraph reported.
JPMorgan and Bank of America Merrill Lynch have been
working with Schneider since September on the takeover deal,
the Telegraph said.
The Telegraph report said Schneider's bankers have been
looking at a variety of ways of financing the deal, and it
cited sources as saying the most likely way a takeover would be
financed would be via a part-cash, part-share offer.
Tyco's market capitalization is roughly $25 billion,
including Tuesday's gains. Schneider has a market value of
about $46 billion. One credit analyst said Schneider would need
to issue equity since it could not borrow enough to pay for
such a deal.
Schneider, which competes with Germany's Siemens (SIEGn.DE)
and ABB ABBN.VX of Switzerland, has made a series of small to
medium-sized acquisitions over the past year, many of them
focused on emerging markets like India and Russia.
Besides security services, Tyco makes fire safety systems
and industrial products such as valves and controls used in
water and chemical systems.
(Reporting by Nick Zieminski; Editing by Bernard Orr and Tim