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Cooper rejects Danaher bid
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August 8, 2001: 1:39 p.m. ET
Calls unsolicited $5.5 billion offer inadequate; Danaher disappointed
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NEW YORK (CNNfn) - Cooper Industries Inc.'s board of directors unanimously rejected Danaher Corp.'s unsolicited $5.5 billion bid to acquire the company Wednesday, calling the bid inadequate, highly conditional, and not in the best interests of shareholders.
Cooper also authorized management and its financial advisor, Credit Suisse First Boston Corp., to explore "all strategic alternatives that would maximize shareholder value," including mergers, sales, strategic alliances, acquisitions or other similar alternatives.
"We believe that Danaher's proposal is an attempt to coerce Cooper shareholders into accepting an opportunistic bid to acquire Cooper at a low price," Cooper Chairman and CEO John Riley said.
Danaher issued a short statement Wednesday expressing its disappointment. However, the industrial conglomerate is encouraged that Cooper has postponed its Bermuda re-incorporation plan and has hired bankers to explore alternatives.
"Danaher is committed to our July 25th proposal," Danaher CEO and President H. Lawrence Culp said. "We remain hopeful that we will achieve a negotiated transaction with the Cooper Board, but we are preserving all of our options."
Shares for Cooper Industries (CBE: up $6.32 to $60.31, Research, Estimates) surged more than 11 percent in afternoon trading while Danaher shed nearly 2 percent.
Danaher to boost offer?
Danaher (DHR: Research, Estimates), which manufactures Sears Craftsman tools and environmental testing equipment, offered to buy Cooper (CBE: Research, Estimates) last week for $54-to-$58 a share in cash and stock. That represented a 30 percent-to-39 percent premium over Cooper's shares the day after the deal was announced.
This is Danaher's second attempt to acquire Cooper. Two years ago, Cooper rejected a merger proposal from Danaher that was never publicly disclosed.
Cooper, which produces a line of hand and power tools, industrial lighting systems and electrical control systems, said Danaher's proposal is highly conditional because it presents uncertain value and is subject to due diligence. Based on the recommendation of CSFB, Cooper's board voted to reject the bid.
Danaher made its unsolicited offer just as Cooper's board was preparing to vote on whether to reincorporate in Bermuda from Ohio. The company said Wednesday it has postponed that vote.
"We have concluded that no purpose is served by affording Danaher the opportunity to perpetuate misconceptions about the merits of our re-incorporation," Riley said. "We continue to believe that the re-incorporation of Cooper would bring significant value to all of our constituencies, most importantly, our shareholders."
Cooper thinks it is worth more than $54-to-$58 a share and its rejection of Danaher means the company is looking for a White Knight, said analyst James Lucas, of Janney Montgomery Scott Inc.
"Cooper has put themselves in play," Lucas said. "They want someone to come in and make them an offer."
Possible bidders could include Tyco International Ltd. (TYC: up $0.38 to $53.54, Research, Estimates), which just inked a $2.3 billion stock buy of electronic security firm Sensormatic Electronics.
SPX Corp., which supplies parts and services to vehicle manufacturers, may also be interested. In March, SPX (SPW: up $0.66 to $126.25, Research, Estimates) bought United Dominion Industries Ltd. for $954 million in stock.
Emerson Electric (EMR: down $1.09 to $56.91, Research, Estimates) and General Electric could also be potential bidders. GE (GE: down $0.83 to $41.94, Research, Estimates) is considering appealing European Commission's rejection of its proposed $42 billion purchase of Honeywell International.
With Cooper's shares climbing to nearly $60 Wednesday. Danaher may sweeten its bid and a revised offer could come in the $60-to-$65 range, Lucas said.
"But Danaher is not in a position to do that until they do due diligence," he said. "This is not just looking at public documents but actually getting inside Cooper." 
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