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Danaher (DHR) Plans to Redeem $875M Worth of Senior Notes

Zacks Equity Research

Danaher Corporation DHR announced yesterday that it plans to redeem approximately $875 million worth of senior notes. This declaration was made after the company’s dental subsidiary, Envista Holdings Corporation, successfully closed the initial public offering (IPO) of its common shares on Sep 20.

Notably, the notes considered for redemption includes $500 million of 2.400% senior notes that will mature in 2020 and $375 million of 5.00% senior notes due to expire in 2020. These two varieties of notes were issued by Danaher’s subsidiary, Pall Corporation, and guaranteed by Danaher.

The redemption price of the notes is expected to comprise principal amount (outstanding), make-whole premium and any accrued and unpaid interest. The redemption date has been set as Oct 24, 2019.

Danaher noted that it will use the fund it received from Envista for paying the redemption value of the notes. Of late, Envista raised approximately $643.4 million as net proceeds (after deduction of commissions and underwriting discounts) from the IPO of its 30,783.2 thousand shares (consisting of 26,768 thousand shares sold to the public and 4,015.2 thousand shares bought by the underwriters). Currently, Danaher holds approximately 80.6% shares in Envista.

We believe that Danaher’s latest decision to redeem notes should benefit the company. It has a highly leveraged balance sheet, with long-term debt of approximately $10.1 billion at the end of second-quarter 2019.

Zacks Rank, Earnings Estimate and Price Performance of Danaher

With a market capitalization of approximately $105.1 billion, Danaher currently carries a Zacks Rank #2 (Buy). Over the past 60 days, the Zacks Consensus Estimate for earnings has remained stable at $4.79 for 2019 and climbed 2.4% to $5.59 for 2020.

Danaher Corporation Price and Consensus

Danaher Corporation Price and Consensus

Danaher Corporation price-consensus-chart | Danaher Corporation Quote

In the past three months, Danaher’s share price has increased 1.6% against the industry’s 1.3% decline.



Other Stocks to Consider

Three other top-ranked stocks in the same industry are Federal Signal Corporation FSS, Griffon Corporation GFF and United Technologies Corporation UTX. While Federal Signal and Griffon sport a Zacks Rank #1 (Strong Buy), United Technologies carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Over the past 60 days, these companies witnessed an upward revision in current-year earnings estimate. In the last reported quarter, Federal Signal, Griffon and United Technologies delivered a positive earnings surprise of 19.57%, 10.71% and 7.84%, respectively.

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