Finding a Way Through M&A

RESEARCHNovember REPORT18, 2019 FindingNovember a Way through18, 2019 M&A

Stock Rating HOLD Price Target CAD $123.58 Current Price CAD $140.49

Bear Price Bull Case Target Case

$107.75 $123.58 $139.41

Ticker DHR Danaher Corporation Market Cap (MM) $102,707 Finding a Way through Market Cap/LFCF NTM 33.5x M&A EV/EBITDA NTM 22.5x 52 Week Performance After conducting an analysis of the Medical Devices space at large, the Healthcare Team decided that Danaher Corporation’s ability to 120 effectively use inorganic growth as a competitive advantage warrant a further look. This report outlines various elements of Danaher’s business that we wanted to gain conviction on before reaching a 100 decision on the name.

Overall, we believe that Danaher’s highly disciplined M&A strategy that incorporates the Danaher Business System (DBS) and philosophy 80 of detail-oriented accountability has demonstrated a proven ability to select, integrate and grow acquisition targets. Coupled with its current business, we believe that Danaher has strong fundamentals. 60 Despite our conviction in Danaher’s fundamentals, our price target of 27-Feb-17 29-Apr-17 29-Jun-17 $123.58 is much lower than their current price of $140.59. Therefore, DHR S&PS&P 100 Index the Healthcare Team has decided on a stock rating of HOLD.

Industrials Laura Wu [email protected] Ruby Harris [email protected] William Cao [email protected] The information in this document is for EDUCATIONAL and NON-COMMERCIAL use only and is not intended to Tina Huang constitute specific legal, accounting, financial or tax advice for any individual. In no event will QUIC, its members or directors, or Queen’s University be liable to you or anyone else for any loss or damages whatsoever (including [email protected] direct, indirect, special, incidental, consequential, exemplary or punitive damages) resulting from the use of this document, or reliance on the information or content found within this document. The information may not be reproduced or republished in any part without the prior written consent of QUIC and Queen’s University.

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Table of Contents

Company History and Overall M&A Strategy 3

Danaher Business System (DBS) Deep Dive 5

Segments Analysis: Overview of Key Segments 6

Environmental & Applied Segment: Hach Company 7

Life Segment: Subsidiaries Overview 9

Diagnostics Subsidiaries 11

GE Biopharma Acquisition: Deep Dive 13

Valuation 16

2 November 18, 2019 Finding a Way through M&A

Company History and Overarching M&A Growth Strategy

The history of Danaher adds a fair bit of colour to its Danaher could gain a competitive advantage through overall strategy as a company. Danaher Corporation operational excellence, or (2) bolt-on transactions, was originally founded in 1969 as a REIT; 9 years later, wherein complementarity of goods can be leveraged it reorganized itself as a new corporation, called or network effects through expanding market Diversified Mortgage Investors. It then entered into the coverage could be built. This highly principled and vehicle systems market, modeling most of its disciplined M&A strategy has allowed its operating operations after the Toyota Production system. It margins to grow an average of 2.8% faster than eventually expanded into many more markets, most revenue, indicating that with each acquisition it is able notably that of precision motion equipment, electronic to tighten its operations and parent them effectively. test tools, environmental water quality testing, power quality products and consumables manuf