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Danaher Acquires Chromatography Consumables Firm Phenomenex

NEW YORK (GenomeWeb) – Danaher announced today that it has acquired Phenomenex, a privately held manufacturer of consumables for the separation sciences.

Phenomenex, which is particularly known for its proprietary chromatography consumables for the liquid and gas chromatography market, will operate as a standalone business and will retain its brand, its 700 employees, and its work sites. The company makes and sells more than 7,000 products in 92 countries, for various applications in drug discovery and development, clinical research, forensic toxicology, petrochemical analysis, environmental analysis, and food safety.

The deal is expected to close by the end of the year. Further terms of the agreement were not disclosed.

"Joining Danaher will allow us to maintain the high pace of innovation that our customers and international distributors have come to expect from us," said Phenomenex CEO Fasha Mahjoor in a statement. "This is our opportunity to further expand our R&D activities, benefit our customers with a more diversified product portfolio and reinforce our market leadership."

In a note to investors this morning, Evercore ISI analyst Ross Muken said he estimates Danaher paid "north of $700 million for Phenomenex, including a likely tax benefit. With revenues approaching $200 million, this implies an enterprise-value-to-revenue multiple of about 3.5x. … This would also imply a return on invested capital north of 10 percent by year five, making this tuck-in fit within the traditional framework of Danaher."

Muken also called the financial implications of the deal "remarkably attractive," adding that this was "certainly a deal chosen on culture/fit and not just price paid as multiples are well below what an asset like this would fetch in a full-blown auction." As far as Phenomenex's end markets go, he noted, chromatography is a "tremendous long duration asset." Evercore expects to see "further tuck-in acquisitions [for Danaher] over the medium term with a similar bias," Muken wrote.

Danaher recently announced plans to acquire Cepheid for $4 billion. That deal is also expected to close by the end of the year, and is likely to accelerate revenue growth in Danaher's diagnostic test portfolio.

Danaher's shares were up more than 1 percent at $77.40 in morning trading on the New York Stock Exchange.

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