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Beckman Likely To Retain Iconic Name

Beckman Coulter Inc., Orange County’s oldest medical technology company, could keep its name and a good part of its operations intact if past acquisitions by Washington, D.C.-based Danaher Corp. are any guide.

Last week, Danaher offered $6.8 billion for Brea-based Beckman, ending two months of offers and jockeying for the medical diagnostic products company by private equity firms, Danaher and others.

The deal is set to close in July.

Danaher hasn’t made any formal announcements on how it’ll integrate Beckman.

Some streamlining and job cuts are likely. And Danaher is set to put its own stamp on Beckman, including through executive training and other programs.

But Danaher, best known as the maker of Craftsman tools sold at Sears, tends to put its units and brands ahead of the parent company and generally keeps acquired businesses intact.

Danaher is buying Beckman to add to its growing healthcare business, which accounts for $2.3 billion of its more than $13 billion in yearly sales.

Beckman, with annual revenue of $3.7 billion, makes instruments and chemicals used by hospitals and medical laboratories running tests for doctors as well as by medical researchers and drug developers.

“We believe Beckman Coulter is an iconic company with a great brand,” Danaher Chief Executive H. Lawrence Culp said on a conference call with analysts last week.

County Icon

Beckman is one of the county’s most recognizable companies.

Founder Arnold Beckman, an OC icon, moved his medical instrument company from Pasadena to Fullerton in the 1950s.

Beckman’s arrival here helped usher in a medical technology industry that today includes Edwards Lifesciences Corp., Allergan Inc. and others.

Danaher already has operations here with Sybron Dental Specialties Inc., a maker of dental products that is based in Orange and plans to move to Anaheim this year.

Sybron also provides some insight into how Danaher handles acquisitions.

For the most part, Sybron has operated on its own since Danaher bought it for $2 billion in 2006.

After the deal, analysts said that they didn’t anticipate heavy culling since Danaher bought Sybron as a way to get into dental products.

Danaher’s dental businesses, including Sybron, accounted for $1.8 billion of the company’s 2010 revenue.

Some of Danaher’s other deals have followed the same pattern.

Those include its 2007 buy of Tektronix Inc., a Beaverton, Ore.-based maker of oscilloscopes, logic analyzers and other gear, for $2.8 billion, and its 2005 purchase of Leica Microsystems, a German maker of surgical microscopes and other instruments, for $550 million.

Some changes, including cuts of duplicated corporate jobs, are expected at Beckman.

“Although we don’t know exactly how this will play out, we anticipate there will be changes,” Beckman said in a Securities and Exchange Commission filing last week.

Beckman has 1,700 workers in OC and 12,400 worldwide.

Danaher said it expects to see $250 million in cost savings from having Beckman as part of the company.

Of that, about a quarter will come “from not only the public company costs, but general administration of streamlining and the like,” Culp said on Danaher’s conference call.

Analysts’ Take

Analysts seem to believe Danaher won’t deviate much from its integration style with Beckman.

“My sense is that Danaher’s going to let it operate as a standalone division,” said Bruce Jackson, a medical diagnostic analyst with New York investment bank Morgan Joseph LLC.

Dark Daily, a website that follows laboratory and medical testing news, predicted Beckman’s customers “are not likely to see many changes.”

“The Beckman Coulter name, reputation and products are key assets of the acquisition,” Beckman said in its SEC filing.

A combination of Beckman and Sybron, which are within about 10 miles of each other, seems remote. Beckman is set to fall under a separate operating group within Danaher, and the two don’t share any customers or other similarities.

Danaher is anteing up for Beckman.

The company’s offer is about 1.8 times Beckman’s 2010 revenue and values the company at about 33% higher than what it was worth before the announcement.

The offer is 45% higher than what Beckman was worth in early December, when talk of a sale first emerged.

Even with a big premium, Wall Street seems to like the deal and sees it adding to Danaher’s profits.

“In terms of the valuation, I think Danaher got a good deal,” Morgan Joseph’s Jackson said. “Any acquisition that is accretive is a good thing.”

Danaher’s sales growth, which has been reliant on deals through the years, should “reaccelerate materially” after the Beckman Coulter deal closes, said Ajit Pai, a New York-based analyst who follows Danaher for Stifel Nicolaus & Co., a St. Louis investment bank.

Danaher’s life sciences and diagnostics segment, including Beckman, could approach 40% of the company’s estimated $16 billion revenue in 2012, Pai said.

That would be up from 12% of 2008’s revenue of $12.7 billion, according to Pai.

Tough 2010

The deal ends two months of bidding for Beckman, which makes a rival bid unlikely, according to Dan Leonard, an analyst with Leerink Swann LLC in Boston.

Beckman started exploring offers at the end of a difficult 2010 in which the company wrestled with quality and regulatory issues.

The problems stemmed from an early 2010 recall of a profitable heart disease test known as troponin.

That recall drove the departure of Chief Executive Scott Garrett, a big stock drop, a 2010 profit revision and attracted private equity firms and others as possible buyers.

Interim Chief Executive J. Robert Hurley is set to continue leading Beckman until the deal closes and Danaher appoints a new leader, according to an SEC filing.


Danaher

  • Headquarters: Washington, D.C.
  • Business: Craftsman tools, testing equipment, dental products, other
  • Market value: $33 billion
  • 2010 sales: $13.2 billion
  • 2010 profit: $1.8 billion
  • Local employees: 400 (at Sybron)
  • Notable: brothers Steven, Mitchell Rales own 20%

Beckman Coulter

  • Headquarters: Brea
  • Business: medical testing, research products
  • Market value: $5.7 billion
  • Projected 2010 sales: $3.7 billion
  • Projected 2010 profit: $271 billion
  • Local employees: 1,700
  • Notable: founded by Arnold Beckman in 1935

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