Better Than The Berkshire Hathaway? Danaher's Value
Chris DeMuth Jr. • 71 Comments
Chris DeMuth Jr. • 71 Comments
Wed, Oct. 12, 11:45 AM
- Danaher (DHR +0.9%) is higher after agreeing to acquire Phenomenex, a privately held manufacturer and distributor of high-value consumables for the separation sciences.
- The terms were not disclosed, but Evercore ISI analyst Ross Muken estimates DHR paid more than $700M for the company, including probable tax benefits.
- Phenomenex revenues of ~200M gives it an enterprise value to revenue multiple of ~3.5x and an EV to EBITDA multiple in the low to mid-teens, which implies an return on invested capital of more than 10% by the fifth year, “making this tuck-in fit within the traditional framework of DHR.” Muken says.
Tue, Sep. 6, 7:05 AM
- Danaher (NYSE:DHR) inks a deal with Cepheid (NASDAQ:CPHD) to acquire all the outstanding stock of the molecular diagnostics firm for $53 a share in cash (~$4B including debt less acquired cash). The transaction should close in Q4.
- Danaher is a conglomerate of over 20 businesses that are managed under the auspices of the Danaher Business System. Its Life Sciences & Diagnostics segment includes Beckman Coulter, HemoCure, Leica Biosystems, Leica Microsystems, Molecular Devices, Pall, Radiometer and SCIEX.
- CPHD is up 53% premarket on light volume.
Aug. 31, 2015, 9:33 AM| Aug. 31, 2015, 9:33 AM
Jul. 28, 2015, 3:37 PM
- Danaher (DHR +1.2%) is upgraded to Overweight from Equal Weight with a $100 price target, raised from $93, at Morgan Stanley, which believes the Pall (PLL +0.5%) acquisition could have a "transformational impact" on the company.
- While the firm believes the price being paid for PLL seems difficult to justify through financial metrics alone, the deal is likely to drive double-digit free cash flow and EPS growth through 2020 and would lead to a meaningful improvement in the risk/reward profile of the stock.
- Stanley also notes that DHR’s strong Q2 results - including 3.5% organic growth, along with margin expansion and 123% free cash conversion - "underlines DHR's ability to execute in a choppy, low growth environment and this is the world that we will likely be in for the next 2-3 years."
Jul. 14, 2015, 10:03 AM
- Danaher (DHR +0.9%) has completed the merger of its communications businesses (including Tektronix Communications, Arbor Networks and parts of Fluke Networks) with NetScout (NTCT +1.9%) in a tax-free transaction.
- Danaher shareholders who tendered their shares as part of the offer will receive approximately 2.4 shares of NetScout common stock for each share of Danaher stock tendered and accepted for exchange.
- The deal will create a global provider of network management solutions for carrier and enterprise customers.
- Previously: Danaher amends exchange offer (Jun. 26 2015)
May 14, 2015, 3:47 PM
- Danaher (DHR +0.5%) will be hard pressed to meet its goals related to its pending $13.8B acquisition of Pall (PLL -0.1%), Deutsche Bank analyst John Inch says as he reiterates a Hold rating and $87 target on DHR, adding that its additional plan to split into two separately traded companies is based on an unclear strategy.
- DHR says it expects to save $300M in synergies over the next five years through its acquisition, but Inch says PLL's business appears well run with relatively high margins and little overlap; "the [synergy] target seems aggressive," Inch says, and with the PLL deal largely financed by commercial paper, DHR "appears relatively tapped out on debt capacity."
- Stifel's Robert McCarthy also is "mindful of the high bar for effective execution on the $300M in cost synergies," but foresees a better outcome for the DHR-PLL combination, reiterating a Buy rating and expecting shares to rise to $100.
May 13, 2015, 2:34 PM
- Danaher (DHR +1.2%) paid a high price in its $127.20/share deal for Pall (PLL +4.5%), valuing the filtration and purification company at ~22x EBITDA in the last year, roughly double the median multiple paid for big industrial and life sciences equipment acquisitions in the last five years, according to Bloomberg.
- But Janney analysts like the purchase and DHR's decision to split itself into two companies, noting DHR had less than 5% exposure to the rapidly growing pharma/biotech end-markets; the consolidation enables it to penetrate the rapidly growing biopharma market and will more than double DHR’s exposure to pharmaceutical customers.
- PLL is the no. 2 or no. 3 player in the overall bioproduction market, accounting for one-third of revenues, and is growing at a 10%-plus organic clip with 25%-30% margins, the firm says, adding that it expects continued strong growth as industry dynamics are still evolving.
- Janney thinks more acquisitions could be on the way, speculating that DHR/PLL could circle Repligen (NASDAQ:RGEN) on the belief that bioproduction media remains a gap in its product portfolio.
May 13, 2015, 7:44 AM
- Pall Corp. (NYSE:PLL) has agreed to be acquired by Danaher (NYSE:DHR) for $127.20 per share in cash, or $13.8B including assumed debt and net of acquired cash.
- The offer represents approximately a 28% premium to Pall's closing price of $99.31 on Monday, the last trading day prior to speculation about a possible transaction.
- The deal is expected to close in 2015.
- PLL +4.8%; DHR +7% premarket
- Previously: Jefferies: Danaher has upper hand to acquire Pall (May. 12 2015)
- Previously: WSJ: Danaher, Thermo Fisher compete to acquire Pall Corp. (May. 11 2015)
May 12, 2015, 8:43 AM
- Although it views both companies as logical buyers, Jefferies believes Danaher (NYSE:DHR) has the upper hand over Thermo Fisher (NYSE:TMO) for a Pall Corp. (NYSE:PLL) takeover given its greater relative balance sheet capacity.
- Yesterday, the WSJ reported Pall was in the late stages of an auction that could value the company at $13B or more.
- PLL +20.8%; DHR -0.4% premarket
May 11, 2015, 6:23 PM
- Pall Corp. (NYSE:PLL) +7.1% AH after WSJ reports it is in the late stages of an auction that could value the company at well north of $10B, with potential buyers Danaher (NYSE:DHR) and Thermo Fisher Scientific (NYSE:TMO) said to be vying for a successful deal.
- Pall's market value at today’s close is $10.6B; given prices typically paid in takeovers, the report says a deal for the maker of water filtration and purification systems could be valued at ~$13B or more.
Apr. 23, 2015, 5:49 PM
- At least a half-dozen major industrial companies - including GE, Caterpillar (NYSE:CAT) Siemens (OTCPK:SIEGY), Honeywell (NYSE:HON), Dover (NYSE:DOV), Danaher (NYSE:DHR) and Emerson Electric (NYSE:EMR) - are said to be weighing offers for oilfield services assets worth $5B-$10B that Halliburton (NYSE:HAL) is preparing to sell ahead of its pending merger with Baker Hughes (NYSE:BHI), Bloomberg reports.
- HAL reportedly will send offering materials to those companies, as well as P-E firms and rival oilfield services providers, in the coming weeks; first up likely will be the drill bits unit and another that uses data to track and steer the direction of drills.
- These companies could own an edge over oilfield services companies that analysts have pegged as logical bidders for HAL’s castoffs - such as National Oilwell Varco (NYSE:NOV) and Superior Energy Services (NYSE:SPN) - because HAL might not want to give any more market share to companies that already offer the same services, preferring to sell to new players entering the market.
Oct. 13, 2014, 8:15 AM
- NetScout (NASDAQ:NTCT) agrees to acquire Danaher’s (NYSE:DHR) communications business in a stock deal valued at ~$2.6B, in an attempt to better compete in IT management and cyber intelligence.
- DHR shareholders will receive ~62.5M shares of NTCT common stock and own ~60% of the company.
- DHR says the combined company will generate revenue in excess of $1.2B on a non-GAAP basis, and believes the deal will be accretive to non-GAAP earnings in the first year of combined operation.
Sep. 15, 2014, 2:20 AM
- Danaher (NYSE:DHR) has agreed to buy Nobel Biocare (OTCPK:NBHGY) in an all-cash deal valued at approximately $2.2B, including debt.
- Danaher says the acquisition would widen its market presence and make it the largest consumable and equipment player in the dental industry with sales approaching $3B.
- The deal is expected to be completed in late 2014 or early 2015, after which Nobel Biocare will continue to operate as a standalone company.
Jul. 17, 2014, 6:56 AM
- As part of a restructuring plan, Siemens (OTCPK:SIEGY) has announced it will sell its microbiology unit to Beckman Coulter, a subsidiary of Danaher (NYSE:DHR). The deal will allow Siemens to concentrate more on its healthcare division's in-vitro business.
- The transaction is expected to close in the first quarter of 2015.
Jun. 19, 2014, 11:10 AM
- Danaher (DHR -0.6%) investors are getting edgy for the company's next big acquisition, Bloomberg reports. The industrial conglomerate has not done a deal over $500M since 2012, which is its longest record in over a decade.
- Despite a lack of pricey transactions, CFO Daniel Comas stated last month that the company may have as much as $12B for a deal. CEO Larry Culp also expressed his will for Danaher to continue its high end dealmaking last year, stating the company had the ability to spend more than $8B on acquisitions. Still, a $500M+ deal has still not been made. Investors seem to be holding off on buying the stock until the next big acquisition.
- The company has attempted two takeovers this past year, although both deals ended up going to buyout firms. Danaher and the Blackstone Group put in a bid for J&J's Ortho Clinical Diagnostics unit and Ashland’s water chemicals operations, but has not been able to seal the deal. As a result, the company had a record $3.3B in cash at the end of March.
- Due to the recent years performance record, there is speculation the $56B conglomerate should consider breaking itself up. Another possibility is increasing its dividend or buy back shares if a deal does not come down the pipe.
Feb. 18, 2014, 9:40 AM
- Ashland (ASH +1.3%) agrees to sell its water technologies business to Clayton, Dubilier & Rice for ~$1.8B.
- ASH says net proceeds from the sale will be used toward a new $1.35B stock buyback program, replacing its previous $600M buyback program which had ~$450M remaining.
- A joint bid by Blackstone (BX) and Danaher (DHR) had been seen as the frontrunner in the bidding for the water chemicals unit.