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Danaher's Stock Offering Proceeds to Fund BioPharma Buyout

Zacks Equity Research

Danaher Corporation DHR announced that it successfully closed the offering of preferred and common shares to the public. The offering announcement was made on Feb 25, 2019.

It is worth noting here that this conglomerate signed an agreement to acquire General Electric Company’s GE BioPharma business for $21.4 billion on Feb 25. Since then, the company’s shares have increased roughly 3.8%, ending the trading session at $127.77 on Mar 1.

Offering Details

As noted, Danaher issued 12.1 million of common shares — inclusive of 1.1 million shares sold to the underwriters — for $123.00 per share. In addition, 1.65 million of 4.75% Series A mandatory convertible preferred stocks — including 150,000 shares sold to underwriters — were sold at $1,000 per share.

The company secured net proceeds of $1.44 billion from common shares offerings and $1.60 billion from the issuance of preferred stocks. These proceeds are net of discounts and issuance-related costs.

Danaher intends to use proceeds from these issuances to fund the acquisition of the BioPharma business — part of General Electric’s GE Life Sciences business. However, if this acquisition does not materialize, the company might use net proceeds from the offering for funding its general corporate purposes.

The BioPharma buyout — anticipated to be completed in the fourth quarter of 2019 — will be integrated with Danaher’s Life Sciences segment and will complement the company’s biologics workflow solutions. The buyout is anticipated to boost non-GAAP adjusted earnings by 45-50 cents per share in the first year of the completion of the deal.

Zacks Rank and Stocks to Consider

With a market capitalization of approximately $79.5 billion, Danaher currently carries a Zacks Rank #3 (Hold). In the past 30 days, the Zacks Consensus Estimate for earnings has remained unchanged at $4.78 for 2019.

Danaher Corporation Price and Consensus


Danaher Corporation Price and Consensus | Danaher Corporation Quote

This company’s share price has increased 20.2% in the past three months compared with 12.3% growth recorded by the industry.

Two better-ranked stocks in the industry are Carlisle Companies Incorporated CSL and United Technologies Corporation UTX. While Carlisle Companies currently sports a Zacks Rank #1 (Strong Buy), United Technologies carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

In the past 60 days, earnings estimates for 2019 have improved for Carlisle Companies and United Technologies. Further, the earnings surprise in the last reported quarter was positive 30.58% for Carlisle Companies and 29.14% for United Technologies.

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