Danaher to acquire filtration systems major Pall for $13.6 bn

14 May 2015

US medical and industrial goods giant Danaher Corp has agreed to buy Pall Corp, a leading global provider of filtration and purification solutions to life sciences and industry for approximately $13.6 billion, aiming to strengthen its position in the fast-growing biopharmaceutical market.

Simultaneous with the acquisition, Danaher has announced its plan to split itself into two publicly-traded companies, one focusing on science and technology and the other on diversified industry.

Danaher's all-cash offer of $127.20 per share of Pall represents a 7-per cent premium to the share's closing price of $118.62 yesterday. The enterprise value of the deal is estimated at $13.8 billion including debt.

Danaher's president and CEO Thomas Joyce said,  "Pall is a highly attractive business, with approximately 75 per cent recurring revenues, mid-single digit organic growth and a solid margin profile.''

''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 added.

New York-headquartered Pall, founded in 1946, makes water filtration systems for airplane manufactures, public works companies and biopharmaceuticals.

Pall's 2014 revenue was $2.8 billion, of which $1.5 was from its life sciences segment that serves the fast-growing biopharmaceutical, food & beverages and medical end markets.

Washington-based Danaher is a global science and technology innovator providing its services to a wide range of industries including health care, environmental and industrial. The company generated revenue of $19.9 billion in 2014 and it has a market capitalisation of over $60 billion.

The acquisition, which has been approved by the boards of both the companies, is expected to close this year, subject to customary closing conditions and regulatory approvals.

The transaction is expected to be accretive to the company's 2016 earnings by 40 cents per share.

Danaher intends to fund the deal primarily with cash in hand and proceeds from the issuance of debt or new credit facilities.

Danaher's new science and technology company will retain the Danaher name and will have a turnover of $16.5 billion including Pall Corp, while its diversified industrial business will form a $6 billion new company.

Danaher said both the companies will be now be more focused with access to required capital to pursue organic and inorganic growth opportunities.

"This is an exciting day for Danaher and an important step in our company's history,'' Joyce said.

''The pending strategic acquisition of Pall Corporation announced today offers us the unique opportunity to drive greater shareholder value going forward as two stronger and better companies,'' he further stated.

Joyce will continue to lead Danaher as president, while the company's executive vice president James Lico will become president and CEO of the new company.

Reports earlier this week suggested that Massachusetts-based biotechnology products company Thermo Fisher Scientific Inc was also a contender for the acquisition of Pall.

Meanwhile, Boston-based law firm Block & Leviton LLP said yesterday that it has started an investigation on Pall Corp for possible breaches of fiduciary duty by its board in connection with Danaher's acquisition.

''Block & Leviton's investigation seeks to determine, among other things, whether directors of the company breached their fiduciary duties by failing to maximize shareholder value in the potential acquisition, whether Danaher aided and abetted any such breaches and the process by which the directors considered and approved the transaction,'' the law firm said in a statement.