Danaher Corporation (DHR - Free Report) announced yesterday that it plans to redeem approximately $875 million worth of senior notes. This declaration was made after the company’s dental subsidiary, Envista Holdings Corporation, successfully closed the initial public offering (IPO) of its common shares on Sep 20.
Notably, the notes considered for redemption includes $500 million of 2.400% senior notes that will mature in 2020 and $375 million of 5.00% senior notes due to expire in 2020. These two varieties of notes were issued by Danaher’s subsidiary, Pall Corporation, and guaranteed by Danaher.
The redemption price of the notes is expected to comprise principal amount (outstanding), make-whole premium and any accrued and unpaid interest. The redemption date has been set as Oct 24, 2019.
Danaher noted that it will use the fund it received from Envista for paying the redemption value of the notes. Of late, Envista raised approximately $643.4 million as net proceeds (after deduction of commissions and underwriting discounts) from the IPO of its 30,783.2 thousand shares (consisting of 26,768 thousand shares sold to the public and 4,015.2 thousand shares bought by the underwriters). Currently, Danaher holds approximately 80.6% shares in Envista.
We believe that Danaher’s latest decision to redeem notes should benefit the company. It has a highly leveraged balance sheet, with long-term debt of approximately $10.1 billion at the end of second-quarter 2019.
Zacks Rank, Earnings Estimate and Price Performance of Danaher
With a market capitalization of approximately $105.1 billion, Danaher currently carries a Zacks Rank #2 (Buy). Over the past 60 days, the Zacks Consensus Estimate for earnings has remained stable at $4.79 for 2019 and climbed 2.4% to $5.59 for 2020.
Danaher Corporation Price and Consensus