Danaher water spin off – what do we know?

American conglomerate Danaher has announced it is due to spin out a water division this year and it’s going to be named Veralto.

The fortune 500 science and technology innovator will separate its environmental and applied solutions segment to create an independent, publicly traded company. 

Veralto will comprise Danaher's water quality businesses which include Hach, ChemTreat, Trojan, OTT HydroMet, and McCrometer and Videojet; Esko; X-Rite Pantone and Linx from its product identification platform.

Hach manufactures and distributes analytical instruments and reagents used to test the quality of water and other liquid solutions; chem treat helps customers optimise the efficiency and performance of water treatment systems and processes; Trojan helps its customers to meet their water quality objectives by providing solutions that reduce and recover costs, energy, resources and space; OTT HyrdroMet provides meteorology, hydrology, and telemetry solutions and McCrometer develops innovative flow meters that work with  liquid, steam and gas flow measurements.

Jennifer Honeycutt, who currently serves as Danaher’s executive vice president and joined the business in 1999, will become president and CEO of Veralto.

Veralto’s streamlined water business

Danaher’s water business has grown from approximately US$350 million in 2001 to US$4.7 billion in 2021. This sevenfold revenue growth, along with steady 25 per cent EBITDA margins, has been facilitated by 25 water-related acquisitions, including anchor brands Trojan UV, ChemTreat, and Pall Water. To date, Danaher ranks ninth among publicly traded water companies (by water-related revenues) behind Veolia, Xylem, and Pentair, thereby signaling that Veralto can compete as a stand-alone water company. 

Speaking to Aquatech, Reese Tisdale, president and CEO of Bluefield Research, a water market insight firm, said Veralto’s water business is poised for stronger growth once it is out of the shadows of its sister companies. 

“As a more stand-alone entity, the potential for water brand consolidation could increase toward a more unified water offering,” he said.

“Danaher’s move to launch the US$4.6 billion Veralto businesses is not a surprise. This addition-by-subtraction approach highlights its plan to double down on the ascendant biotech sector. This shift is demonstrated by robust compound annual growth rates of 19.9 per cent and 10.7 per cent among the life sciences and diagnostics units.

“Over the last two years, biotech and science-related research businesses have accelerated, while the company’s water quality business confronted headwinds across core municipal, industrial, and commercial water segments. While geopolitical and economic volatility displaces prior pandemic-related constraints, a more mature water market should provide more solid footing in the long term, benefiting a more independent Veralto and current Danaher shareholders in the long term,” he added. 

Veralto will establish its headquarters in Waltham, Massachusetts, and intends to apply to list its common stock on the New York Stock Exchange under the symbol VLTO.