NEW YORK – Danaher announced on Wednesday that it will spin off its environmental and applied solutions business segment into an independent, publicly traded company.
The new firm, to be referred to as EAS until it is named later, will consist of Danaher's water quality and product identification businesses, including Hach, ChemTreat, Trojan, OTT, and McCrometer on the water quality side, and Videojet, X-Rite Pantone, Esko, and Linx on the product identification side. The deal is expected to be completed in Q4 2023, Danaher said in a statement. It is also intended to be tax-free to shareholders.
Jennifer Honeycutt, who is currently the Danaher executive VP for the segment, will become the new company's president and CEO. In 2021, the segment generated about $4.7 billion in revenue. The standalone company is expected to have an investment-grade credit rating, Danaher said.
"With today's announcement, Danaher will become a more focused science and technology leader committed to innovation and making a profound impact on human health," Danaher President and CEO Rainer Blair said in a statement. "We believe that EAS will be advantaged as a standalone company with greater opportunities to pursue high-impact organic and inorganic investments."
Jefferies analyst Brandon Couillard wrote in a note to investors that the business is the smallest of Danaher's three segments, contributing about 15 percent to its total revenues, but that it "houses many of its best and most successful businesses dating back to the late '90s." He added that "M&A capital has substantially favored" Danaher's life sciences and diagnostics segments, "and the separation will afford EAS greater access to capital and freedom to pursue strategic M&A, leading to higher compounding returns over time as a standalone company."
Most recently, in 2019, Danaher spun off its dental business Envista. Dan Brennan, an analyst at Cowen, wrote in a note to investors that Danaher "has pursued large, accretive deals around the time of their recent major spins," noting that after the Envista separation, Danaher purchased Cytiva and after the spinoff of Fortive, its industrial business, Danaher acquired Cepheid.