NEW YORK (GenomeWeb) – Danaher today announced a definitive merger agreement to purchase Pall in an all-cash deal totaling approximately $13.8 billion.
Under the terms of the deal, which is expected to be completed around the end of the year, Danaher will pay $127.20 for each share of Pall's stock. The $13.8 billion price tag includes assumed debt and is net of acquired cash. The boards of Danaher and Pall have unanimously approved the merger.
Danaher said it expects the deal to be $.40 accretive to its non-GAAP net earnings per share in 2016. Danaher will finance the deal primarily with available cash and proceeds from the issuance of debt and new credit facilities.
After the completion of the deal, which is subject to regulatory approval and a shareholder vote, Danaher will split into two publicly traded companies. Danaher's existing Life Sciences & Diagnostics and Dental segments, water quality and product identification platforms, and Pall will comprise one firm, which will retain the Danaher name. The combined total revenues of the collective businesses were $16.5 billion in their most recently completed fiscal years, Danaher said.
The second industrial growth company, currently referred to as NewCo, will comprise Danaher's Test & Measurement instruments platform, as well as its specialty industrial businesses. The businesses making up NewCo generated about $6 billion in revenues during the most recently completed fiscal year.
Danaher CEO Thomas Joyce will remain President and CEO of the new Danaher after the split. CFO and Executive Vice President Dan Comas will also retain those titles at the firm.
James Lico, currently an executive vice president at Danaher and responsible for the firm's Test & Measurement and Gilbarco Veeder-Root businesses will become NewCo's president and CEO.
In a statement, Joyce said that Pall has about 75 percent recurring revenues and mid-single digit organic growth. "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," he said.
Based in Port Washington, New York, Pall provides filtration, separation, and purification products. In its Fiscal Year 2014, ended in July, it had total revenues of $2.8 billion, including $1.5 billion in the life sciences segment and $1.3 billion in the industrial segment.
As of the end of fiscal 2014, it had 10,400 employees. Danaher had 71,000 employees as of the end of December. It did not say if there would be any layoffs resulting from the merger.
Pall's life science business serves the biopharmaceutical space, as well as the food and beverage, and medical end markets, while its industrial segment provides technologies to customers in process technologies, aerospace, and microelectronics.
Reports of a potential Danaher buy of Pall surfaced earlier this week. While Thermo Fisher Scientific was also mentioned as a possible suitor, the prevailing thought was that Danaher had the upper hand in a possible deal as Thermo Fisher was still digesting its $13.6 billion acquisition of Life Technologies in early 2014.
The deal, if completed, would be the largest acquisition in Danaher's history, Tim Evans, an analyst at Wells Fargo, said in a note earlier this week, and surpasses its $6.8 billion purchase of Beckman Coulter in 2011. Since that deal, Danaher has stayed largely on the M&A sidelines in the life science tools space, though in the past few years, the company has hinted at in interest in possible deals.
With a sizeable cash reserve — as of the end of March, Danaher had $2.51 billion in cash and cash equivalents — management was frequently asked about its M&A strategy, and its former CEO Lawrence Culp suggested that a focus of any deal could be in building out the firm's life science and diagnostic business. However, Joyce, who took over from Culp late last year, has been more non-committal about pursuing acquisitions in that space.
"The pending strategic acquisition of Pall … offers us the unique opportunity to drive greater shareholder value going forward as two stronger and better companies," Joyce said in a statement today. "Each company will be more focused with access to the capital necessary to pursue organic and inorganic growth opportunities."