The Rising Influence of Rising Affluence

[DewDiligence]

DHR -2% on CPHD deal (which isn’t exactly a steal):

https://www.bloomberg.com/gadfly/articles/2016-09-06/danaher-cepheid-deal-shows-its-new-look-is-pricey-to-maintain

The new, nimbler Danaher has expensive taste.

The $55 billion company said Tuesday that it will buy diagnostics-equipment maker Cepheid for about $4 billion [#msg-124976329], marking its first major purchase since completing the spinoff of its more industrial-focused businesses in July. The quick turnaround between the split and this week's deal announcement helps reinforce the logic of the breakup, which Danaher said would help it focus in on life sciences and make it easier to find growth-boosting acquisitions. Easier to find doesn't necessarily mean cheap to buy, though.

…At $53 a share, Danaher's offer values Cepheid at around 5.5 times its projected revenue for 2017. That's more than double the median multiple that Danaher has historically paid.

… That's the price you pay for deciding to become a life-sciences company (with the multiple to match) instead of an industrial conglomerate. Competition for acquisitions is fierce and the targets tend to be expensive even before you tack on a premium. Deals also tend to be more focused on growth, rather than the cost-cutting opportunities that have been Danaher's trademark.