Danaher Corporation DHR on Apr 3 announced the pricing of reopening of €750 million worth of senior notes. The offering will close on Apr 8, 2020.
It is worth mentioning here that the company’s shares have declined 0.94% on Apr 3, ending the trading session at $135.15.
Inside the Headlines
As noted, the offerings will comprise €150 million of 1.700% senior notes due to expire on Mar 30, 2024; €300 million of 2.100% senior notes due to expire on Sep 30, 2026; and €300 million of 2.500% senior notes due to expire on Mar 30, 2030.
Notes due to expire in 2024 have been priced at 100.298% of the principal amount plus interest (accrued). Moreover, the 2026 notes have been priced at 100.842% of the principal amount plus accrued interest. Also, the notes due 2030 have been offered to the public at 102.166% of the principal amount plus accrued interest.
Interest on the senior notes will be paid out annually. The first interest payment will be made on Mar 30, 2021, for the 2024 notes; on Sep 30, 2020, for the 2026 notes and on Mar 30, 2021, for the 2030 notes.
Post the closing of the above-mentioned offerings, the company’s outstanding balance of 1.700% senior notes due to expire in 2024 will be €900 million. The outstanding balance for 2.100% senior notes due 2026 and 2.500% senior notes due 2030 will each be €800 million.
Danaher anticipates securing net proceeds of €753.7 million from the notes offerings. The proceeds are net of underwriting discounts and issuance-related costs. The proceeds will be used for satisfying general corporate purposes — including repaying borrowings under the revolving credit facility and commercial papers.
We believe that offerings of senior notes will increase the company’s debts, and, in turn, might inflate its financial obligations and hurt profitability. However, measures to repay borrowings under commercial papers and revolving credit facility will be a relief.
Danaher’s Debt Profile
It is worth mentioning here that the company's long-term debt at the end of the fourth quarter of 2019 stood at $21.5 billion, reflecting an increase of 30.1% from the previous quarter.
In the quarter, the company issued $4 billion worth of senior notes. The net proceeds of the offering were used to fund the acquisition of the BioPharma business — part of General Electric Company’s GE GE Life Sciences business. Also, Danaher redeemed $875 million worth of senior notes in the fourth quarter.
In March 2020, the company issues €750 million of 1.700% senior notes due to expire in 2024, €500 million of 2.100% senior notes due to expire in 2026 and €500 million of 2.500% senior notes due to expire in 2030.
Zacks Rank, Price Performance and Estimate Trend
With a market capitalization of approximately $94.2 billion, Danaher currently carries a Zacks Rank #4 (Sell). In the past 60 days, the Zacks Consensus Estimate for its earnings has been declined 9.4% to $4.94 for 2020 and 5.9% to $5.85 for 2021.
Danaher Corporation Price and Consensus