Tektronix, Danaher Corp. Merger Depends on Competitive Overlap

Includes: DHR, TEK
by: The M & A Researcher

This is a somewhat complex transaction in that Danaher Corp.’s (NYSE:DHR) "Fluke" subsidiary does compete with Tektronix (TEK) in at least one product area -- Oscilloscopes -- where TEK is firmly established as the worldwide leader with market shares approaching 70% in some niches. The complexity comes not just in the markets, but in the products themselves which are of the technical level that often generates regulatory interest. This can be seen in the timelines chart where a relatively high percentage of instrument-related deals have generated second requests. Of course, no second request have been issued in cash tender offer deals in this segment, which makes this one all the more difficult to assess.

The initial and tentative opinion in this case is that there is a very strong chance of some regulatory delay here, if only due to the breadth of the companies' respective product lines and time that may be required for the FTC (and perhaps other regulators) to determine if niche overlaps exist. The oscilloscope overlap may very well be the only overlap present, but that alone could trigger an HSR re-filing or even a second request. So far, research has come up empty in obtaining recent market share data for this product segment, so that may also become a factor in the federal/international reviews.

It will be noted that TEK claims the following in its annual reports:

Tektronix is a market leader in our four key product areas: Oscilloscopes, Logic Analyzers, Video Test, and Network Management and Diagnostics

Thus, regulators will need to analyze at least four distinct markets here in a very short time frame, for highly complex products. This clearly increases the chances of some delays.

Again, the assessment at this time is tentative. Additional research and analysis will be posted shortly.

Disclosure: We have no positions of any kind, in any security. We are a completely neutral source of research and analysis.

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