- The Washington Times - Monday, September 20, 2004

Danaher Corp. refuses to rest on its reputation as one of the best-performing industrial companies.

The District-based firm, which specializes in making tools and systems to test and improve water quality, said yesterday it will pay $185 million for a Canadian water-treatment company, less than week after revealing that its third-quarter earnings would reach the top of estimates.

Shares fell 31 cents to close at $52.29 on the New York Stock Exchange yesterday. They have risen more than 16 percent since the company executed a two-for-one stock split on May 21. Friday’s closing price of $52.60 was the highest since the split.

Danaher said it offered to buy Trojan Technologies, a London, Ontario, company, for about $8.25 per share. Trojan specializes in using ultraviolet light to make water safer. Executives of both companies said the purchase will help speed deployment of water treatment and testing products into emerging markets such as China, Eastern Europe and India. Trojan board members have recommended that its shareholders accept the offer.

“The acquisition of Trojan brings another premier brand name to Danaher’s environmental platform and broadens our footprint in water quality into the water disinfection segment,” said H. Lawrence Culp Jr., Danaher’s president and chief executive officer.

Earlier this year Danaher paid $425 million for Kaltenbach & Voigt GmbH & Co, a German maker of laboratory and dental equipment, and completed the $102.5 million purchase of Gendex, also a maker of large dental products, such as X-ray machines.

At an industry conference sponsored by Morgan Stanley last week, Danaher said its third-quarter earnings would fall between 54 cents and 59 cents per share, and that revenue would grow between 5 percent and 9 percent.

The company has consistently performed better than most of its peer companies, posting net earnings growth of more than 10 percent in each of the last nine financial quarters. Danaher reported second-quarter net income of $182 million (56 cents per share) compared with $125 million (39 cents) in the comparable quarter of 2003. Sales rose to $1.62 billion from $1.29 billion during the same period.

Fortune magazine in March labeled Danaher the “most admired” company in the precision-equipment sector, besting companies including Eastman Kodak, 3M and Agilent Technologies.

Analysts said Danaher has performed well because it manufactures products like tools, water testing equipment and printing systems that are constantly in demand. It is perhaps best known as the maker of the Craftsman line of hand tools. Furthermore, the company’s unique way of doing business, known as the “Danaher Business System,” places extraordinary emphasis on finding ways to produce products more efficiently, analysts said.

“We continue to be extremely positive on Danaher,” said Wendy Caplan, an analyst with Wachovia Securities, who does not own shares. She said Danaher has “superb growth prospects, better-than-average profitability and acquisition expertise.”

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