Sterne Agee Raises Danaher Corp. Price Target to $47, Maintains Neutral Rating

In response to Danaher Corporation's DHR $6.8 billion acquisition of biomedical testing product manufacturer Beckman Coulter, Inc. BEC, Sterne Agee raises its price target of DHR to $47 from $46 and maintains its neutral rating for DHR. The transaction will be funded by 25% of DHR's current cash, 60% in debt, and 15% in new equity. DHR expects the transaction to be $0.05 to $0.10 accretive to 2011E EPS and $0.25 to $0.30 accretive to 2012E EPS. These expectations are based on expectations of a $250 million savings in cost synergies, with “~50% from traditional operating synergies, 25% from general administrative cost reductions, and another 25% from reduced IT costs and efficiencies.” Through the transaction, BEC will be acquired into DHR's Life Sciences & Diagnostics segment, which accounted for 14% of 2010 sales and is forecast to account for 18% of 2011 sales. The acquisition will boost this segment's sales to account for a projected 38% of total 2011 sales. Sterne Agee believes that the BEC acquisition offers the potential for further upsides revisions to EPS and boost prospects for 2012. DHR is currently trading at $49.74.