Danaher Corp agreed to buy medical diagnostics company Beckman Coulter Inc for $5.8 billion cash, moving further into its growing medical technology business.
The $83.50-per-share deal represents an 11 percent premium to Beckman's closing price on Friday, and a roughly 45 percent premium over its price in December before rumors of a deal entered the marketplace, according to Beckman.
Beckman shares jumped 9.8 percent to $82.55 in premarket trading, while Danaher rose to $49.56.
The transaction is valued at about $6.8 billion, including assumed debt, the companies said. The deal is expected to close in the first half of 2011.
About a quarter of the funding comes from cash on hand, 15 percent from equity and 60 percent from new assumed debt, Danaher said on a conference call with analysts. Beckman is growing at 25 percent a year in China, Danaher said.
An aging population and more emphasis on preventive medical care, along with growth of medical technology, make clinical diagnostics an attractive $25 billion market, Danaher CEO Larry Culp said.
Danaher could cut costs by about $250 million over several years. The deal will add 5 cents to 10 cents to earnings this year and 25 cents to 30 cents a share in 2012.
Beckman Coulter, which has annual revenue of about $3.7 billion, would become part of Danaher's Life Sciences and Diagnostics segment, which includes its imaging and testing businesses.
Morgan Stanley was the sole financial adviser to Danaher, while Goldman Sachs advised Beckman Coulter.
Last December, Beckman hired Goldman to help with the possible sale of the company, which makes diagnostic instruments used in medical testing systems.
Prior to that, Beckman had experienced a volatile year in which Chief Executive Officer Scott Garrett suddenly resigned after a product recall.
Washington-based Danaher, whose products include environmental testing equipment and dental tools, said in December it could spend about $4 billion on acquisitions within the next year-and-a-half.
The company has remade its portfolio in recent years through both acquisitions and asset sales, to focus on aster-growing, more profitable businesses that are less dependent on cyclical demand.
Recent deals in the medical devices sector include orthopedic device maker Stryker Corp's $1.5 billion acquisition of a Boston Scientific Corp St Jude Medical Inc's $1 billion acquisition of AGA Medical Holdings Inc, whose devices treat structural heart defects.
In December, Thermo Fisher Scientific Inc, the world's largest maker of scientific instruments, said it would buy Dionex Corp for $2.1 billion to broaden its lab equipment and environmental safety offerings.