Danaher Imaging Acquisition Spurs X-Rite Stock 38.5% By JAMES DETAR, INVESTOR'S BUSINESS DAILY Posted 04:40 PM ET
Highly rated industrial products maker Danaher (DHR) made a $625 million bid for color management firm X-Rite (XRIT) that sent shares of the latter up 38.5% Tuesday.
X-Rite owns the color matching company Pantone and Danaher is looking to expand in the imaging systems market. Danaher slipped 3.2%.
The proposed buyout immediately fell under a cloud as a law firm that says it represents investors announced it's investigating X-Rite's board for alleged breach of fiduciary duties.
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Block & Leviton said it seeks to determine whether the board failed to maximize shareholder value by agreeing to be bought by Danaher.
Danaher had 2011 revenue of $16.4 billion, and has a Composite Rating of 93, out a possible 99. IBD's proprietary Composite Rating rates stocks in five areas, with extra weight on earnings and stock price strength.
The action in Danaher shares wasn't unusual because the stock of an acquiring company often falls after it announces a purchase.
In addition to X-Rite's proprietary Pantone Matching System, Danaher gets various measurement systems, software, color standards and services that the company offers.
"Color measurement is an attractive market adjacency to our existing Product Identification businesses," said Danaher Executive Vice President William Daniel, in the announcement. Product identification coding is used by a variety of industries to track products.
Along with existing Danaher technologies, "we believe X-Rite and Pantone will further Danaher's leading position in the Product Identification industry and present an attractive value creation opportunity," Daniel added.
Danaher has benefited in recent quarters from new manufacturing projects as the economic recovery picks up steam.
Originally a hand tools manufacturer, maker of the Craftsman and Matco tool lines, Danaher's diversified tool and equipment line is widely used across five segments: test and measurement, life sciences, environmental, dental instruments and industrial technologies.
Its share price rose 27% from a Nov. 25 low of 44.39 to a recent top of 56.45 on April 2, prior to the market correction that began last week.
Danaher said it will pay about $5.55 cash for each X-Rite share. The purchase price includes acquired debt and cash.
The deal is expected to close by end of this quarter.
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