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Danaher bids for Cooper
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August 1, 2001: 12:13 p.m. ET
Conglomerate bids $5.5B in stock and cash for electrical products maker
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NEW YORK (CNNfn) - Danaher Corp. made an unsolicited bid Wednesday to buy Cooper Industries Inc. for $5.5 billion, two years after the conglomerate reportedly first offered to acquire the Houston-based maker of electrical products.
Under the proposed deal, Danaher, which manufactures Sears Craftsman tools and environmental testing equipment, is offering $54 to $58 in cash and stock for each Cooper share. That represents a 30 percent to 39 percent premium over Cooper's Tuesday closing price of $41.51. Danaher also would assume about $1.5 billion of debt.
Cooper produces a line of hand and power tools, industrial lighting systems and electrical control systems.
"This is a compelling transaction for both companies from both an industrial and financial perspective," Danaher CEO H. Lawrence Culp Jr. said in a statement. "Cooper's product portfolio is highly complementary to Danaher's, adding significant scale to our power quality and reliability product lines."
Cooper spokesman John Breed declined to comment.
The move by Washington, D.C.-based Danaher comes two years after it first proposed merging the companies. Cooper rejected that offer, which was never publicly disclosed.
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Danaher expects the transaction to add at least 10 percent to its cash earnings per share in the first year and said the combined companies would have annual revenue of $8 billion.
In a July 25 letter to Cooper's CEO John Riley, Culp urged Cooper's board of directors to speed up its consideration of the offer in light of its imminent vote on whether to reincorporate Cooper in Bermuda from its Ohio headquarters. Cooper has been seeking a way to improve cash flow.
Also in the letter, Culp noted that Danaher's stock has outperformed Cooper's stock by 25 percentage points and the S&P 500 by 7 points since 1999.
"We firmly believe that our merger proposal represents a far more attractive near-term and long-term alternative to Cooper's shareholders than your proposed restructuring plan," Culp said in the letter. "The significant tax and other costs involved in migrating Cooper offshore would be altogether avoided in a Danaher transaction which would also provide your shareholders with an immediate and substantial value boost."
Cooper (CBE: up $11.32 to $52.83, Research, Estimates) stock jumped about 25 percent in early trading Wednesday, while Danaher (DHR: down $1.54 to $55.05, Research, Estimates) dipped slightly. 
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