Danaher Corp., a District-based industrial conglomerate, yesterday said it was standing pat on its offer to buy a Swiss surveying firm despite a higher competing bid from a Swedish company.
The maker of Craftsman tools and industrial measurement devices had reached an agreement on July 26 to pay $925 million in cash for Leica Geosystems AG of Switzerland. Danaher's deal followed a June bid from Stockholm technology company Hexagon AB, which offered $788 million in cash and stock for Leica.
On Monday, Hexagon raised its offer for Leica to the equivalent of about $1.15 billion, but a significant portion of the offer included Hexagon stock. Leica yesterday said its board was reviewing the latest offer from Hexagon. The board rejected the June Hexagon offer out of hand before accepting Danaher's bid.
"Nobody tries to get into a bidding war on purpose," said Brian K. Langenberg, an independent analyst who follows Danaher for Langenberg & Co. "But Danaher is good at this. They don't offer to put up a billion dollars unless they've done their homework."
Danaher has bought more than 40 companies in the past 20 years since it was founded as a holding company controlled by the brothers Mitchell P. and Steven M. Rales. The Montgomery County natives assembled the first holdings in Danaher in the 1980s and early 1990s through a series of high-profile and often hostile corporate takeovers. In addition to Craftsman, its hand tool brands include Allen and Armstrong.
During the past two years, Danaher has focused on acquiring small and medium-sized industrial firms in highly specialized businesses such as Leica.
Leica is a fast-growing seller of high-tech surveying systems used by construction firms, real estate developers and engineers to map out a piece of land. Leica's systems use satellite positioning and three-dimensional graphic imagery to create highly accurate measurements and depictions of finished structures in less time than traditional surveying techniques. It had revenue of $773 million in the fiscal year ended March 31.
A spokesman for Danaher could not be reached yesterday. But in a lengthy statement distributed by the company, Danaher said that its all-cash offer was superior to Hexagon's, mostly because the value of Hexagon's offer relies heavily on Hexagon stock, which Danaher said was volatile and thinly traded. Danaher also said the resulting combination of Hexagon and Leica would be heavily indebted.
Hexagon, in a statement, said that its higher offer represents its belief that it can wring cost cuts out of the combined companies while keeping up Leica's strong growth rate. But Danaher questioned that analysis.
"The purported value of Hexagon's revised offer is based substantially on future promises," Danaher said. "Hexagon's presentation includes pro forma forecasts for 2005, 2006 and 2007 but does not disclose any underlying, supporting data."
Leica would fit into one of Danaher's three "strategic platforms" around which it has built its acquisitions: professional instrumentation, hand tools and industrial technologies. Its acquisitions in the last five years have been in obscure but high-growth businesses -- this year it bought the leading U.S. manufacturer of high-tech dentistry equipment and cabinets.
Of its $6.9 billion in revenue last year, $2.9 billion came from its professional instrumentation business that Leica would become a part of, $2.7 billion from industrial technologies and $1.3 billion from its tools business.