Danaher / Beckman Coulter Deal Could Yield Efficiencies in Competitive Diagnostics Market

Includes: BEC, DHR
by: The Burrill Report

By Michael Fitzhugh

Danaher’s (NYSE:DHR) pending $6.8 billion acquisition of Beckman Coulter (NYSE:BEC) would add the biomedical testing company to a growing portfolio of life sciences and diagnostic toolmakers at the heart of a fast-growing medical technology player.

The medical testing equipment and supply market is fiercely competitive and is becoming even tougher as industry consolidation and intense pricing pressures from group purchasers take their toll. Despite the challenges, Danaher and Beckman may indeed prove to be complementary. The conglomerate has a reputation for achieving cost reductions and productivity gains in its portfolio companies and may be able to boost the margins in Beckman’s diagnostic supplies line-up, which accounts for the biggest part of its revenue.

Including cash and debt, Danaher’s $83.50 per share offer represents about a 45 percent premium to Beckman’s closing price on December 9, 2010, the date on which market speculation began regarding a potential sale of the company.

Beckman’s board supports the deal and is recommending that the company’s shareholders accept it too. If shareholders sign on, the deal would place the company in Danaher’s life sciences and diagnostics unit, which already includes Leica Microsystems, AB Sciex, Radiometer and Molecular Devices.

Danaher wasn’t the only company interested in buying Beckman. According to Bloomberg, other bidders included the Carlyle Group, Apollo Global Management, and Blackstone and TPG Capital.

Danaher says it expects to complete the transaction in the first half of 2011.