Danaher Nears $10 Billion Acquisition of Masimo Amid Market Decline
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 2 days ago
0mins
Should l Buy DHR?
Source: seekingalpha
Danaher Corp (DHR) is experiencing a significant decline, hitting a 20-day low, as shares fell 6.86% in pre-market trading.
The drop follows reports that Danaher is nearing a roughly $10 billion acquisition of Masimo Corp, which represents a substantial premium over Masimo's nearly $7 billion market cap. This acquisition is seen as a strategic move to enhance Danaher's position in the medical technology sector, despite the market's overall weakness, with the Nasdaq-100 down 0.80% and the S&P 500 down 0.39%.
The implications of this acquisition could be profound for Danaher, potentially providing new growth momentum in a competitive market. However, the immediate market reaction has been negative, reflecting investor caution amid broader market trends.
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Analyst Views on DHR
Wall Street analysts forecast DHR stock price to rise
18 Analyst Rating
17 Buy
1 Hold
0 Sell
Strong Buy
Current: 208.560
Low
240.00
Averages
266.18
High
310.00
Current: 208.560
Low
240.00
Averages
266.18
High
310.00
About DHR
Danaher Corporation is a global life sciences and diagnostics innovator. The Company operates through three segments: Biotechnology, Life Sciences and Diagnostics. The Biotechnology segment includes the bioprocessing and discovery and medical businesses and offers a broad range of equipment, consumables and services that are primarily used by customers to advance and accelerate the research, development, manufacture and delivery of biological medicines. The Life Sciences segment offers a broad range of instruments, consumables, services and software that are primarily used by customers to study the basic building blocks of life, including deoxyribonucleic acid (DNA) and ribonucleic acid (RNA), nucleic acid, proteins, metabolites and cells. The Diagnostics segment offers clinical instruments, consumables, software and services that hospitals, physicians’ offices, reference laboratories and other critical care settings use to diagnose disease and make treatment decisions.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Tech Stock Sell-off: A wave of selling in technology shares is occurring as investors express uncertainty about their future value, particularly as price-to-earnings ratios shrink dramatically, which negatively impacts overall investment sentiment.
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- Transaction Background: The deal follows a proxy contest led by activist hedge fund Politan Capital Management, resulting in the removal of Masimo founder Joe Kiani as board chair, who subsequently stepped down as CEO but retains about a 5% stake, indicating significant governance changes.
- Valuation Metrics: The transaction is valued at approximately 18x estimated 2027 EBITDA, or 15x including expected annual synergies, reflecting Danaher's confidence in Masimo's future profitability and potential growth in the diagnostics sector.
- Financial Expectations: Danaher anticipates Masimo will generate over $530 million in EBITDA by 2027, with more than $125 million in annual cost synergies and over $50 million in annual revenue synergies expected by the fifth year post-acquisition, showcasing a strong financial outlook.
- Market Reaction: Danaher’s stock rose 0.55% to $207.50 in the latest trading session, indicating a positive market response to the acquisition, with analysts suggesting that the deal enhances Danaher’s portfolio of high-quality assets.
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- Danaher Reduction: Selling 200 shares of Danaher at around $207 each decreases the weighting from 2.1% to 1.05%, realizing a disappointing 9% loss, reflecting concerns over its acquisition of pulse oximetry leader Masimo and a preference for biotech-focused acquisitions.
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See More
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