By Danielle Douglas
Capital Business Staff Writer
Sunday, February 13, 2011; 5:49 PM

Manufacturing giant Danaher of the District has been on an outright tear, racking up 15 acquisitions since last February. The flurry of deals, however, may pale in comparison with what the company could accomplish this year with its stronger capital position, analysts say.

The conglomerate, maker of products including medical equipment and Craftsman tools, is poised to take advantage of the fertile mergers and acquisitions market.

Placing greater emphasis on the life-science companies - those that manufacture or sell equipment used in scientific testing and research - has been a key component of that strategy. Just last week, Danaher, in its biggest deal, snagged Beckman Coulter, which makes diagnostic research equipment for biomedical companies, for about $6.8 billion. The company, based in Brea, Calif., with about 11,800 employees and annual revenue of $3.7 billion, is widely considered an industry leader. News of the deal sent Danaher's shares up $1.35, or 2.8 percent, to $49.33. The company did not respond to a request for comment.

Once the deal closes in the first half of the year, Beckman will join five other subsidiaries in Danaher's life-science and diagnostics unit, which will become the largest division of the company. That unit started to take off with the $1.1 billion acquisition of AB SCIEX and Molecular Devices, suppliers of bioanalytical measurement systems. Danaher projected that the deal, which was completed a year ago, would increase its annual revenue by more than $650 million.

"Ten years ago, Danaher didn't have any life-science businesses. Now, post Beckman, it's going to be about 35 percent of their sales," said analyst Nigel Coe of Deutsche Bank. "It has counted for the vast majority of their acquisition dollars."

Revenue for life-science companies is expected to grow faster than for other health-care industries, at 5 to 7 percent annually for the next several years, according to Moody's Investor Service. The credit-rating agency said the segment is less vulnerable to lawsuits from patients, product recalls or health-care reform.

"There are a number of businesses in this area that have high growth margins - typically 60 percent or more," Coe said. "Sometimes these assets have great products but are under-managed. And Danaher has a strong operating culture, so they can come in and run those businesses effectively."

Danaher, he said, has been able to nearly double the operating margins of many of the companies that it has picked up in recent years.

Danaher has been retreating from some of its more capital-intensive, industrial segments, such as aerospace. Several weeks ago, the company sold Pacific Scientific Aerospace for $685 million to U.K.-based Meggitt.

Most of the other transactions Danaher recently completed were for less than $500 million, including the purchase of Belgium software maker EskoArtwork last month and electronics maker Keithley Instruments in September. After the pricey Beckman buy, Coe suspects that if Danaher continues to shop around, it will go for small deals.

Danaher, which last year reported an 18 percent increase in annual revenue to $13.2 billion, is well capitalized for future acquisitions. The company took some hits during the recession that led to the closing of 30 facilities and elimination of about 3,300 jobs to save $220 million a year.

"In the context of more cash flow and lower cost of capital, I think it's going to be an active year," said Richard C. Eastman, an analyst at Robert W. Baird and Co. "The question is just valuations, which aren't exactly low."