Danaher To Buy Pall In $13.8 Bln Deal; To Split Into Two Companies

(RTTNews) - Diversified machinery maker Danaher Corp. (DHR) said Wednesday that it has agreed to acquire filtration products maker Pall Corp. (PLL) for an enterprise value of about $13.8 billion, including assumed debt. The company also said it plans to split itself into two independent, publicly traded companies, after completing the acquisition.

Danaher estimates the acquisition to be accretive by $0.40 to its adjusted net earnings per share in 2016.

Under the terms of the deal, Danaher will buy all of the outstanding shares of Pall for $127.20 per share in cash. The transaction represents a premium of about 28 percent to Pall's closing stock price of $99.31 on May 11, 2015, the last trading day prior to initial media speculation around a possible transaction.

The transaction is not subject to any financing conditions. Upon completion of the transaction, Pall will operate as a subsidiary in Danaher's portfolio and will maintain its brand. Danaher noted that the acquisition of Pall will bolster its capabilities in the life sciences and industrial businesses.

The Wall Street Journal had reported on Monday that Port Washington, New York-based Pall is nearing a possible sale, with potential buyers Danaher and laboratory equipment maker Thermo Fisher Scientific Inc. (TMO) vying to acquire the filtration products maker.

According to the WSJ report, Pall was in the final stages of an auction that could value the company at more than $10 billion. The final bids for the company were said to be due later this week.

For fiscal 2014, Pall generated consolidated revenues of $2.8 billion, with $1.5 billion from its Life Sciences segment and $1.3 billion from its Industrial segment.

The Life Sciences segment serves customers in the fast-growing biopharmaceutical market, as well as food & beverage and medical end markets. The Industrial segment serves customers in the process technologies, aerospace and microelectronics markets.

The board of directors of both companies have approved the acquisition, and Pall's board has unanimously recommended that Pall shareholders approve the transaction. The two companies expect the transaction to be completed around the end of calendar year 2015.

Danaher expects to finance the transaction primarily with its available cash and proceeds from the issuance of debt or new credit facilities. Pall would be Danaher's largest acquisition to date, after the $5.9 billion it paid in 2011 for Beckman Coulter Inc.

In a separate statement, Danaher said it plans to separate into two independent, publicly traded companies and expects the transaction to occur through a tax-free spin off. The transaction will create a science and technology growth company that will retain the Danaher name, and a diversified industrial growth company.

The science and technology growth company, will include Danaher's existing Life Sciences & Diagnostics and Dental segments, Water Quality and Product Identification platforms and Pall Corp. Collectively, its businesses generated revenues of about $16.5 billion, including Pall Corp., in their most recently completed fiscal years.

The diversified industrial growth company or NewCo, will comprise Danaher's Test & Measurement Instruments platform that includes Matco, Gilbarco Veeder-Root, Automation and Sensors, as well as its other Specialty Industrial businesses. NewCo's businesses generated revenues of about $6 billion in the most recently completed fiscal year.

Danaher expects to complete the separation around the end of calendar year 2016, subject to the satisfaction of closing conditions. This includes obtaining final approval from the Danaher board.

Thomas Joyce and Daniel Comas will continue to serve as President and CEO and Executive Vice President and CFO of Danaher, respectively, following the completion of the transaction.

James Lico, currently Executive Vice President with responsibility for Danaher's Test & Measurement and Gilbarco Veeder-Root businesses, will become President and CEO of NewCo upon separation.

DHR closed Tuesday's trading at $86.00. In Wednesday's pre-market activity, the stock is up $4.00 or 4.65 percent to $90.00.

PLL closed Tuesday's trading at $118.62. The stock is up $5.98 or 5.04 percent to $124.60 in pre-market activity.