practices which have led to a slide in stock prices. Directors believe their stock is significantly undervalued. Mairi Mallon reports Tyco International Ltd is to buy back 20 million shares in a bid to stop the share price nosedive caused by concerns about the firm's accounting practices.

The move was approved yesterday in Bermuda at the company's Annual General Meeting, and within hours shares had risen seven percent to $41.86.

The repurchase programme would reduce Tyco's diluted shares outstanding by about 2.3 percent.

"Tyco has never been stronger in terms of its ability to generate free cash flow, its business fundamentals or its long-term prospects,'' Dennis Kozlowski, chairman and chief executive officer of Tyco told shareholders yesterday.

"Over the past few weeks, the strengths of these fundamentals has been obscured by meritless allegations concerning our accounting and disclosure practices, primarily as they relate to our acquisitions.'' The company has seen stock fall in price following a New York Times column on Friday which highlighted Tyco's recent acquisitions of AMP Inc and United States Surgical.

Both of these companies took big losses just before the acquisitions closed, allowing those businesses to show strong growth after they were acquired by Tyco.

On Monday a similar article in the Wall Street Journal reiterated these concerns, and shares of Tyco fell nearly 11 percent to close at $35.625 on the New York Stock Exchange.

Tyco's problems began in mid-October when Dallas-based research firm David W.

Tice raised questions about the company's method of accounting for mergers.

The company, maker of Curaid bandages, fire fighting equipment and ADT security systems, has been feverishly acquiring businesses in recent years.

But a sharp drop in the price of stock -- down about 32 percent in the past few weeks -- has prompted worries that the company may find it more difficult to use its stock as currency and make additional acquisitions.

Now the board has moved to stop these concerns and the resulting slide in stock prices.

"All of our accounting and disclosure practices are appropriate and in full compliance with generally accepted principles and US Securities and Exchange Commission regulations,'' added Mr. Kozlowski.

He said: "In addition to what Tyco has said, respected outside entities have conducted extensive reviews of our accounting and disclosure practices and attested to their sufficiency and comprehensiveness.'' Mr. Kozlowski said PricewaterhouseCoopers, the Securities and Exchange Commission and Certified Public Accountants at major Wall Street investment firms had all conducted extensive reviews and found no irregularities.

The share repurchasing programme, which was approved by the board of directors, is the maximum allowed under rules related to pooling accounting used in Tyco's merger with AMP.

Under this programme, the company is authorised to repurchase up to an additional 20 million of its outstanding common shares in the open market and through private transactions.

"This programme represents a very attractive use of our capital at a time when we believe our stock is significantly undervalued,''said Mr. Kozlowski.

"It demonstrates our confidence in Tyco's long-term earnings power and our commitment to building shareholder value.'' In the Wall Street Journal yesterday Mr. Koslowski said the company was not to make any further of the all-stock acquisitions that prompted the recent investor concerns.

Mr. Koslowski is reported as saying that "it is not worth doing'' all-stock deals using pooling-of-interests accounting.

He said this was because of the company's depressed share price and the controversy about pooling deals, which have come under regulatory fire and may be banned next year.

Mr. Kozlowski told the paper it will instead use mostly cash for acquisitions and may supplement its cash pool by selling a couple of smaller units for between $1 billion and $1.4 billion.