Danaher offers $340 million to buy Keithley

LONDON – Danaher Corp., which owns famous T&M companies Tektronix and Fluke, is set to acquire Keithley Instruments Inc. for about $340 million, or $300 million net of cash to be assumed.

The offer of $21.60 per share in cash represents a 74 percent premium over Tuesday's closing price.

 The news sent Keithley's shares soaring, up $9.02 to $21.41. The acquisition has been unanimously approved by the board of directors of Keithley (Solon, Ohio), a maker of dc and ac electrical current and signal measurement instruments. Upon the closing of the deal Keithley will be absorbed into Danaher's Tektronix business.

According to Jessy Cavazos, industry director for test and measurement group, at consulting firm Frost and Sullivan, the proposed acquisition of Keithley is another sign that Danaher is moving aggressively to assemble a broad portfolio in the test and measurement business.

"Danaher is a company to watch out for in the future," Cavazos said. "They have the potential to be the future HP/Agilent in terms of test and measurement."

Cavazos, who described the proposed acquisition as "complementary," said she is interested in how Keithley will be integrated into Tektronix. When Danaher acquired Tektronix in 2007, she said, many assumed it would be integrated into Fluke. But Danaher kept Tektronix separate under the Danaher umbrella and eventually split both companies into multiple divisions.

"Keithley is the No. 4 player in the data acquisition market and an important player in the electrical test equipment industry," Cavazos said. "It's complementary to Tektronix, which dominates the oscilloscope market."

"Along with Fluke and Tektronix, Keithley further solidifies Danaher's leading position in the test and measurement industry and presents an attractive value creation opportunity," said Jim Lico, executive vice president of Danaher (Washington), in a statement.

"We believe this transaction creates significant value for Keithley's shareholders and I am excited about the opportunity this transaction represents for Keithley's customers and employees," said Joseph P. Keithley, chairman, president and CEO of Keithley, in the same statement.

The acquisition is subject to customary closing conditions, including the receipt of regulatory approvals and adoption of the merger agreement by Keithley's shareholders, and is expected to be completed during the fourth quarter of calendar 2010. A group affiliated with Joseph Keithley, representing about 20 percent of the voting power of the company, has agreed to vote in favor of the merger.