Danaher Corporation has reached a definitive agreement to acquire Masimo Corporation for approximately $9.9 billion in an all-cash transaction, a move that positions Danaher as a leader in patient monitoring and expands its diagnostics portfolio. The deal, announced on , values Masimo at $180 per share, representing a roughly 40% premium over its closing price of just over $130.
Masimo shares experienced a significant surge following the announcement, jumping 34.4% shortly after the opening bell on to nearly $175. Conversely, Danaher’s stock saw a decline of approximately 3%, reflecting investor reaction to the substantial investment.
The acquisition will integrate Masimo, a prominent manufacturer of pulse oximeters – devices crucial for non-invasive monitoring of blood oxygen levels – into Danaher’s diagnostics franchise. This will allow Danaher to compete more effectively with established players like Philips in the patient monitoring market. Danaher CEO Rainer Blair stated the acquisition “will greatly strengthen our diagnostics franchise,” adding that Masimo will operate as a standalone company within the larger organization. He also highlighted opportunities to broaden Masimo’s market reach and improve patient outcomes, particularly in acute care settings.
Beyond pulse oximetry, Masimo produces a range of other non-invasive patient monitoring systems. The company has been embroiled in a protracted intellectual property dispute with Apple concerning the heart-rate monitoring technology utilized in the Apple Watch. In , a U.S. Federal court awarded Masimo $634 million in damages as a result of this dispute.
Danaher, a U.S.-based life sciences manufacturer, has a history of aggressive mergers and acquisitions. This deal marks its largest acquisition in over five years, surpassing the $21.4 billion takeover of Cytiva in , the biologics manufacturing arm formerly owned by GE Life Sciences. The Masimo acquisition is anticipated to be finalized in the second half of .
The path to this acquisition was significantly influenced by activist investor Politan Management, led by Quentin Koffey, a former Elliott Management alumnus. Politan launched back-to-back proxy contests in and , ultimately leading to the departure of Masimo’s founder and former CEO, Joe Kiani, and securing four board seats for Politan. A key grievance voiced by Politan was Masimo’s $1 billion acquisition of consumer audio company Sound United, which they deemed a departure from the company’s core competencies.
Responding to Politan’s concerns, Masimo divested Sound United for $350 million last year, effectively reversing the transaction. Since Politan first publicly disclosed its stake in Masimo in , Masimo’s share price has increased by 60%. Kiani retains approximately 5% ownership in the company, while Politan holds a near-9% stake.
Danaher’s stock performance has been mixed in recent years. While it experienced a surge during the COVID-19 pandemic, it has since struggled, currently down 28% from its peak in . The company’s market capitalization stood at $150 billion as of . Shares dipped almost 7% in pre-market trading on .
Prior to the Masimo deal, Danaher’s most recent significant acquisition was the $5.7 billion takeover of UK life sciences group Abcam in . Danaher has a track record of spinning out successful, publicly listed affiliates, including Veralto, Envista, and Fortive.
Citigroup and Kirkland & Ellis served as advisors to Danaher throughout the transaction, while Masimo received counsel from Centerview Partners and Morgan Stanley, alongside legal representation from Sullivan & Cromwell and White & Case.
