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Danaher to Buy Pall Corp., Split and Spin-Off

May 13, 2015
A $13.8-billion acquisition expands life sciences technology offerings, sets up new growth strategy Two separate companies "… drive greater shareholder value going forward"

Industrial conglomerate Danaher Corporation has a definitive agreement to merge with Pall Corporation, an acquisition estimated at $13.8 billion (at the proposed rate of $127.20/share), including the debt to be assumed and the liquid assets to be gained in the takeover. But, the buyer also plans to split its portfolio into two independent, publicly traded companies: one focused on products for science and technology sectors; another that carries forward the new group’s other industrial lines of business.

The Danaher brand will be attached to the first business, and will include the anticipated Pall Corp. assets.

Currently, Danaher is a portfolio of companies in testing and measurement, environmental technologies, life sciences and diagnostics, dental, and industrial technologies. Among its many brands are Fluke, Keithley Instruments, Hach, Leica Biosystems and Leica Microsystems, Dover, Kollmorgen, and many more. The group posted revenue of $19.9 billion last year.

Pall manufactures and supplies products and systems for filtration, separation, and purification that remove contaminants or separate substances from various solids, liquids and gases for industrial and life science industries.

Pall had $2.8 billion in sales last year, supplying life sciences (pharmaceuticals, food and beverage, and medical markets) and industrials (aerospace, electronics) sectors.

Danaher expects to finance the transaction primarily with available cash and proceeds from the issuance of debt or new lines of credit.

"This is an exciting day for Danaher and an important step in our company's history," according to Thomas P. Joyce, Jr., president and CEO. “Danaher has always been at its best when all platforms have the ability to invest in the highest impact organic growth opportunities, pursue meaningful acquisitions and use the Danaher Business System to continuously improve performance. The pending strategic acquisition of Pall Corporation … offers us the unique opportunity to drive greater shareholder value going forward as two stronger and better companies."

Analysts suggest that Pall’s operations in the biopharmaceutical market, as well as food/beverage and medical markets are particularly valuable to Danaher, which has its own businesses in the industrial markets (process technologies, aerospace, and microelectronics) in which Pall also operates.

Also, the merge-and-split plan is seen as part of a growing corporate trend in which large conglomerates reorganize their portfolios, selling off lines of business that are seen as incompatible with future strategy. The primary example of this is General Electric’s plan to spin off the GE Capital financial arm.

“Pall will provide us a leading business with significant runway for expansion and strengthens our life sciences position in the strategically-attractive, high-growth biopharmaceutical market,” Joyce observed.

He predicted that Danaher’s management practices would give Pall associates “tools to accelerate new product development and improve operational efficiency in the years to come."

The acquisition has been approved by the directors of each company, unanimously, and the Pall board unanimously recommended that Pall shareholders approve the transaction.

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