Danaher Corporation DHR recently named the new diversified industrial growth company, which it had planned to launch as part of the split following the Pall merger deal, as Fortive Corporation. The name is derived from Latin root 'fort' which means strong. Probably driven by this development, Danaher’s shares climbed 2.1% to close at $96.53 during the regular trading session on Friday.
During second-quarter 2015, Danaher had penned a deal to take over Pall Corp. for approximately $13.8 billion. After the completion of the merger, Danaher had planned to split itself into two independent, publicly traded companies. The new diversified company, slated to be listed in the New York Stock Exchange, is expected to staff 20,000 employees globally.
Danaher is looking forward to complete this “spin off” transaction during the third quarter of 2016. To be headquartered in Everett, WA, Fortive will categorize business activities under two segments, namely, Professional Instrumentation and Industrial Technologies. Some of Danaher group’s leading brands, such as Fluke, Qualitrol, Tektronix, Gilbarco Veeder-Root, Kollmorgen and Matco Tools, will be included under Fortive.
The new diversified industrial company will closely follow the business disciplines of Danaher such as creating high value for customers, maximizing organic growth & operating margins, and pursuing strategic mergers & acquisitions for strengthening competitive position. We believe that Fortive, armed with Danaher’s vast client base and profound market knowledge, is expected to excel in areas like professional instrumentation, automation, sensing and transportation technologies.
As Danaher accomplished most of its financial goals with the help of its famous Danaher Business System, Fortive too is looking forward to devise its strategies around the Fortive Business system. The latter will be at the heart of the company’s operating model and business culture.
Given that the brands included in Fortive had managed to garner revenues worth $6.3 billion as on Dec 31, 2014, we believe the newly formed company has bright prospects.
Incidentally, during third-quarter 2015, Tektronix commenced the shipping of its latest high-performance oscilloscope, DPO70000SX; while Gilbarco Veeder-Root upgraded its EMV-compliant systems that are expected to witness high demand in the long run. Similarly, other brands of Danaher continue to benefit from positive industry trends as well as its internal strength. We believe such steps will further strengthen Danaher’s business lines, boding well for the long term.
Danaher currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the industry include Dycom Industries Inc. DY, Federal Signal Corp. FSS and Macquarie Infrastructure Corp. MIC. While Dycom sports a Zacks Rank #1 (Strong Buy), both Federal Signal and Macquarie hold a Zacks Rank #2 (Buy).
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