August 15, 2005
Danaher Makes Cash Tender Offer to Buy Outstanding Leica Geosystems Shares
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Susan Smith - Managing Editor


by Susan Smith - Managing Editor
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Message from the Editor -


Welcome to GISWeekly! In July, an agreement was reached between Danaher Corporation and Leica Geosystems Holdings AG to make a cash tender offer to acquire all of the outstanding shares of
Leica Geosystems, for CHF 500 per share (approximately USD$386 per share) for a total price of approximately USD$950 million. Leica Geosystems is a global leader in geospatial measurement instrumentation, used by construction workers, environmental engineers, surveyors, civil engineers, and contractors who use their solutions to measure and capture parameters such as location, distance and relative position. What are the reasons behind this big offer? Find out in this week's Industry News.


GISWeekly examines select top news each week, picks out worthwhile reading from around the web, and special interest items you might not find elsewhere. This issue will feature Industry News, Acquisitions/Alliances/Agreements, Announcements, Appointments, New Products, Around the Web and Upcoming Events.


GISWeekly welcomes letters and feedback from readers, so let us know what you think. Send your comments to me at


Best wishes,

Susan Smith, Managing Editor




Industry News


Danaher Makes Cash Tender Offer to Buy Outstanding Leica Geosystems Shares

By Susan Smith


For most geospatial professionals, the name
"Danaher" has meant nothing until recently, when that company announced its agreement with Leica Geosystems Holdings AG to make a cash tender offer to acquire all of the outstanding shares of
Leica Geosystems, Heerbrugg, Switzerland for CHF 500 per share (approximately USD$386 per share) for a total price of approximately USD$950 million. This includes transaction costs and net of estimated cash to be acquired, plus Danaher will assume USD$80 of debt in connection with the acquisition.


In a
webcast broadcast from Zurich in late July, Danaher President and CEO, H. Lawrence Culp, Jr. gave a brief overview of company, informing listeners that Danaher Corporation is an $8 billion company headquartered in Washington, D.C., and is listed on the New York Stock Exchange. The company is a leading manufacturer of professional instrumentation, industrial technologies and tools and components. Today Danaher serves many customers around the world, with over 35% of their revenue generated in Europe.


The tender offer is one that the Board of Directors of Leica Geosystems unanimously recommended that the shareholders of Leica Geosystems accept. Prior to the announcement of the offer, Danaher had acquired 95,000 Leica Geosystems shares, totaling approximately 4% of the total outstanding shares. In addition, Danaher has formed an agreement with a holder of 146,331 Leica Geosystems shares, “or approximately 6% of the total outstanding shares, for which the holder has agreed to tender the holder's shares into Danaher's offer under specified terms and conditions.”


Culp cited four reasons why Danaher was interested in Leica Geosystems:


1) There is a tremendous fit between Leica Geosystems and Danaher. Leica Geosystems is similar in its approach to other professional instrumentation companies that Danaher owns.

2) Leica Geosystems strongly enhances the portfolio of Danaher. “They are a wonderful addition to our company and provide a stronger growth opportunity for our shareholders,” said Culp.

3) This transaction creates value for both companies' shareholders.

4) Danaher understands what it takes to play and win in this market. The company brings to the table complementary skills and global resources. They believe they will reach a ROI of 10 % capital after tax in the next five years. There is compelling industrial logic for both companies, according to Culp. Also, “We have strengths we'd like to share to help them expand their channels of distribution.”


There will be no change of Leica Geosystems' headquarters; they will remain in Heerbrugg, Switzerland.


In a Q&A session, an attendee asked about another transaction that occurred July 1, 2005, that of a definitive agreement between Danaher and German-based Leica Microsystems AG from LM Investments S.a.r.l. That transaction had a price tag of approximately USD$550 million. “The transactions are completely unrelated,” confirmed Culp. “We had been interested for some time in Leica Microsystems as a way to enter more forcefully into the high precision optical systems market. There is no plan here to put the companies back together. These companies serve separate markets and separate entities very well and that's how we intend to go forward.”


The Danaher/Leica Geosystems transaction should close in September or October.


Hans Hess, CEO of Leica Geosystems, Heerbrugg, Switzerland, is retiring, but will be overseeing the Leica Geosystems-to-Danaher transition, and helping the CEO successor.


One attendee mentioned that very often companies do not fare well after acquisition. “We look at the financial performance on our business, and we do focus on free cash flow generation,” noted Culp. “This is the 14th year in a row where our free cash exceeds our income. Our focus is to grow the business, invest in R&D and we can invest without it being our capital investment. We are discriminating not only about the companies we buy but the industries they represent.” Culp said they look for companies with strong expertise and good momentum.


As an example, the management team of Leica Geosystems is very strong and capable. Their financial performance and position in the market are excellent. Annual revenues generated in the most recently completed fiscal year reached approximately USD$600 million. There should be no effect in 2005 on earnings, but earnings accretion in 2006 should be approximately $.05 per share.


The brand Leica Geosystems is a brand Danaher will soon own. Leica Microsystems controls the Leica Geosystems name, yet that is never mentioned in any promotional efforts. Customers value the Leica Geosystems name so strongly it has become a special asset, so there will be no change.


Another attendee mentioned a previous offer made by the company, Hexagon. Hexagon said if they were to make a cash tender, they would spin off Leica's polymer business. According to Culp, Danaher “hasn't gotten to the point of changing Leica's core portfolio.” So far, they do not plan to get rid of any of its assets. Apparently, Danaher made the contact with Leica Geosystems following Hexagon's offer, and approached them “in as friendly a manner as possible given the circumstances.”


Although the shareholders (except for those who are members of the Board of Directors, numbering about 20% of the investors) have not shared in the discussion about the cash tender offer, Culp said the growth potential of this business enhances the Danaher portfolio to the point that they believe there is a compelling argument for the Danaher shareholder.


Leica Geosystems is a global leader in geospatial measurement instrumentation, used by construction workers, environmental engineers, surveyors, civil engineers, and contractors who use their solutions to measure and capture parameters such as location, distance and relative position. Products include mobile mapping, GPS Systems, photogrammetry and imaging, locators, Total Stations (TPS) and the System 1200 and SmartStation, which combines TPS and GPS.




Acquisitions/Alliances/Agreements


MapFrame Corporation and Kelly Corporation announced their partnership related to Baltimore Gas & Electric (BGE), a subsidiary of Constellation Energy. Kelly will manage and perform a pole inspection project utilizing MapFrame's FieldSmart(R) mobile mapping and field automation software.


OneGIS is pleased to announce that it has expanded its GIS service offerings by inking a value added reseller (VAR) agreement with Telcordia Technologies. OneGIS will now market and support Telcordia Network Engineer, a GIS-based communications network design, documentation, and maintenance application built on the ESRI ArcGIS platform. Network Engineer supports the design and management of connected networks and associated inside and outside plant equipment, all on an integrated Geodatabase. The offering complements other ESRI ArcGIS applications that OneGIS currently offers in conjunction with its system integration and implementation services.


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-- Susan Smith, GISCafe.com Managing Editor.


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