According to a Reuters article, Beckman Coulter's (NYSE: BEC) efforts to sell itself have reached the final bid phase, with at least two interested parties.
Unfortunately, they are both private equity groups - one a combination of Blackstone and TPG Capital, the other Apollo and Carlyle. Danaher (NYSE: DHR) apparently was interested and still may be, but there was no confirmation that they were involved in the final round of bidding.
So, why do I say "unfortunately"? Well, if private equity buys this company, they're most likely going to be interested in restructuring it with an eye towards maximum cash-on-cash return. That is almost never good news for employees, and especially employees in the some of the slower-growth "legacy" diagnostics markets of Beckman.
If Danaher buys Beckman (or General Electric (NYSE: GE), or Philips (NYSE: PHG) or whomever else you wish to suggest), there's a better than fair chance that the company will stay intact. Sure, there will likely be some head-cutting, particularly in overlapping areas like finance, IT, middle management and so on. But I think it would be unlikely to see wholesale changes; Danaher isn't going to pay $6B+ and then radically rearrange the entire company. Moreover, I would like to think that a strategic buyer would understand not only the long-term cash flow potential of these slower-growing units, but also the bundling and marketing leverage they could provide in the context of a larger healthcare business.
Even though I don't own Beckman, and wouldn't buy it here, I do hope it ultimately goes to a strategic buyer and not a financial buyer. Sure, I happen to think that Abbott Labs (NYSE: ABT) and Roche (Nasdaq: RHHBY) are better companies and better stocks, but the employees of Beckman are not to blame for where the company sits today and I would hate to see another purging of scientists and technicians out of the healthcare sector.
All of that said, it's really interesting to me that there are apparently so few strategic bidders for BEC. There is a lot of cash and borrowing capacity out there, but companies do not want to bite ... at least not for Beckman Coulter. I guess that supports my thesis that this is not a terribly interesting diagnostics companies, as it is not as though med-tech companies routinely show price discipline in M&A.
2 comments:
I read your Investopedia article on this deal. Its interesting.
Now that the acquisition has happened, what do you think would happen to Beckman.
There have been news about Beckman retaining its name and about Danaher's other subsidiaries have operated on their own in the in the previous deals.
Also seems that the customers of Beckman need not have to worry at all.
Is this a worthy move for Danaher? Will Beckman make profits for Danaher and how will it affect Danaher's market share? Is this positive to the other companies?
@ Jane -
Everything in Danaher's past behavior suggests that Beckman will retain its name. Leica, Sciex, and so on still operate under their names, and when you fill up at a gas station it still says "Gilbarco Veeder Root", not Danaher.
Generally speaking, Danaher does not interfere much with the operations of its subsidiaries beyond the initiation implementation of "the Danaher way" and a relentless drive to lower costs.
Is it a good move for DHR? Yes. As I said in another piece, if DHR can lift BEC up to DHR-average performance, the company will profit for the move.
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