Beckman has been trading on deal speculation since early December, and it was only last week that a Reuters article speculated on private equity bids in excess of $5 billion for the company. At that time, little mention was made of a strategic buyer for the business, though this author has been maintaining that Danaher would likely be the most credible buyer and that a price of eight times trailing EBITDA would be a fair price.
Lo and behold, Danaher has offered $83.50 in cash for Beckman, a nearly $7 billion deal that values Beckman at a trailing EV/EBITDA of just a bit over eight. That bid also represents a 45% premium to Beckman's pre-rumor price, and a pretty generous price for a true turnaround project. Given the operational improvements that Beckman needs and some of the peculiarities of the business, the last large deal in diagnostics (Siemens' acquisition of Dade Behring for 16 times EBITDA in 2007) is really not an apples-to-apples comparison, so Beckman shareholders should not feel too badly abused in this transaction. (For related reading, Does Beckman Bow To The Inevitable?)
What Danaher is Getting
In Beckman Coulter, Danaher is acquiring a diagnostics business with some major heft in many sizable markets. Beckman is a leader in the clinical chemistry market and has been at the vanguard of the fast-growing lab automation market (where expensive and increasingly hard-to-find technicians are being replaced by machinery). Beckman is relatively less of a factor in the faster-growing immunoassay market, but has a large share in the hematology market and a decent foothold in flow cytometry, where it competes with Becton Dickinson (NYSE: BDX) (among others).
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