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Should Berkshire Buy Danaher? Your Thoughts Please...


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Danaher Corp. (DHR ) is not nearly as big, famous, or influential as conglomerates such as General Electric (GE ), Berkshire Hathaway (BRK ), or 3M (MMM ). It owns such a mundane and sprawling portfolio of sleepy, underloved industrial businesses--companies that make dental surgery implements, multimeters, drill chucks, servomotors, and wrenches, just to name a few--that it seems deliberately assembled to be as unsexy as possible. But despite its low profile, Danaher is probably the best-run conglomerate in America. It's clearly the best performing: Over 20 years, it has returned a remarkable 25% to shareholders annually, far better than GE (16%), Berkshire Hathaway (21%), or the Standard & Poor's 500-stock index (12%).




Look at its latest deal for Beckman. Beckman has a strong portfolio of complex biomedical testing technologies, with an installed base of about 200,000. At a purchase price of $7 billion, the Beckman transaction came to roughly 8.6 times earnings before interest, taxes, depreciation and amortization (EBITDA), the cheapest-ever deal for a medical instrument maker, according to Bloomberg. Danaher was able to beat out private equity powerhouses like the Blackstone Group (NYSE: BX) and the Carlyle Group.


The Beckman acquisition should double Danaher's exposure to the life sciences market, which has a strong long-term growth outlook, while also creating roughly $250 million in cost synergies. With the aging population, there will certainly be more demand for sophisticated medical instruments and devices. There are also large growth opportunities in emerging markets. True, Beckman has had problems with quality (there was a recall of a heart testing product that has resulted in an FDA investigation), but Danaher's experience and track record indicate that it should be able to improve in this area.  

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Guest longinvestor

What do you mean by mark to air?  Are you talking about the same strategy Singleton of Teledyne used..  issue high priced stock to get cheaper assets?

Correct, borrowing Buffett's words, not my own.

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