Dive Brief:
- Danaher has completed its $9.9 billion takeover of Masimo, establishing itself as a competitor to Medtronic in the pulse oximetry market.
- The completion of the purchase, which Danaher reported Wednesday, positions the company to start integrating Masimo in pursuit of more than $125 million of annual cost synergies and more than $50 million of annual sales synergies by the fifth full year after the deal closure.
- Masimo will slot into a diagnostics portfolio that features Radiometer, a Danaher business that specializes in blood gas analysis and other testing in acute care settings.
Dive Insight:
Danaher followed Masimo for over a decade before inking the deal to buy the company, CEO Rainer Blair said on the company’s first-quarter earnings call in April. The company’s long-standing interest reflected a belief that Masimo “is well positioned with its trusted brand, differentiated technology and attractive financial profile,” the CEO said.
The overlap between Masimo and other parts of Danaher’s business is part of the motivation for the deal. Products sold by Masimo and Radiometer “sit next to each other” in acute care settings, the CEO said, creating significant call point synergies.
Masimo’s geographic strengths could help Radiometer, and vice versa. Radiometer, which was founded in Denmark, is stronger than Masimo in Europe, Blair said, while Masimo is stronger than Radiometer in the U.S. The relative strengths mean there is “probably some opportunity for Masimo to help us, including Radiometer, in the U.S.,” Danaher CFO Matt Gugino said on the earnings call.
Selling Masimo products as part of the broader Danaher diagnostics portfolio could help the acquired company target integrated delivery networks, or IDNs, Gugino said. Blair previously discussed how executives at IDNs increasingly want to talk to Danaher about broader deals. Buying Masimo will allow Danaher to offer pulse oximetry products as part of its agreements with IDNs.
Masimo competes for the pulse oximetry market with Medtronic, which the acquired company has said holds “a substantial share” of the market. Technology companies such as Alphabet, Amazon, Apple and Samsung Electronics, some of which have incorporated pulse oximeters in consumer wearables, are also potential competitors to Masimo.
Blair said the company has the money and “leadership bandwidth” to strike further deals across any of its three business areas. The team sees “plenty of opportunity to deploy capital and [is] fully prepared to do that as the opportunities arise,” Blair said.
