Danaher Corporation DHR yesterday announced the pricing of €1.75 billion worth of senior notes. The notes will be the company’s general unsecured obligations. The offering will close on Mar 30, 2020.
It is worth mentioning here that the company’s shares have gained 0.13% yesterday, ending the trading session at $129.32.
Inside the Headlines
As noted, the offerings will comprise €750 million of 1.700% senior notes due to expire in 2024, €500 million of 2.100% senior notes due to expire in 2026 and €500 million of 2.500% senior notes due to expire in 2030.
About the pricing, notes due to expire in 2024 have been priced at 99.931% of the principal amount, whereas 2026 notes are priced at 99.717% and 2030 notes at 99.642%.
Interest on the senior notes will be paid out annually.
Danaher anticipates securing net proceeds of €1.733 billion from the notes offerings. The proceeds are net of underwriting discounts and issuance-related costs. The proceeds will be used for satisfying general corporate purposes — including repaying borrowings under the revolving credit facility and commercial papers.
We believe that offerings of senior notes will increase the company’s debts and in turn, might inflate its financial obligations and hurt profitability. However, measures to repay borrowings under commercial papers and revolving credit facility will be a relief.
Danaher’s Debt Profile
It is worth mentioning here that the company's long-term debt at the end of the fourth quarter of 2019 stood at $21.5 billion, reflecting an increase of 30.1% from the previous quarter.
In the fourth quarter of 2019, Danaher issued $4 billion worth of senior notes through its subsidiary — DH Europe Finance II S.à r.l. As noted, the offerings will comprise $700 million of 2.050% senior notes due to expire in 2022, $700 million of 2.200% senior notes due to expire in 2024, $800 million of 2.600% senior notes due to expire in 2029, $900 million of 3.250% senior notes due to expire in 2039 and $900 million of 3.400% senior notes due to expire in 2049.
The net proceeds of the offerings will be used to fund the acquisition of the BioPharma business — part of General Electric Company’s GE GE Life Sciences business. This buyout will be complete on Mar 31, 2020.
Also, the company redeemed $875 million worth of senior notes in the fourth quarter. Notably, the notes considered for redemption include $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.
Zacks Rank, Price Performance and Estimate Trend
With a market capitalization of approximately $90 billion, Danaher currently carries a Zacks Rank #3 (Hold). In the past 60 days, the Zacks Consensus Estimate for its earnings has been decreased 2.9% to $5.38 for 2020 and 1.8% to $6.17 for 2021.
Danaher Corporation Price and Consensus
Danaher Corporation price-consensus-chart | Danaher Corporation Quote
The company’s share price has decreased 15.4% in the past three months against the industry’s decline of 27.8%.
Stocks to Consider
Two better-ranked stocks in the industry are Griffon Corporation GFF and Hitachi Ltd. HTHIY. While Griffon sports a Zacks Rank #1 (Strong Buy), Hitachi carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In the past 30 days, earnings estimates remained stable for both the companies.
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