Joint Venture Announced!

 

Earlier today, Danaher announced that it has formed a strategic joint venture bringing together companies within the Danaher Tool Group with Cooper Tools, a subsidiary of Cooper Industries. This is an exciting opportunity, and I wanted to share my perspective on this with you.

 

I am pleased to share with you that Steve Breitzka, currently the Group Executive and President of Danaher’s Tool Group, will become the President of the new organization. There will also be a Board of Directors created, which will have equal representation from Danaher and Cooper. The Chairman of the Board will be Steve Simms who many Danaher associates will recognize. Steve joined Danaher from Black & Decker in 1996 and ran Danaher Tool Group for many years. His knowledge of this industry is second to none. Terry A. Klebe, who is Cooper Industries’ Senior Vice President and Chief Financial Officer, will serve as Vice-Chairman. Also appointed to the Board are: Daniel Comas, Chief Financial Officer, Danaher Corporation Christopher McMahon, Group Vice President, Finance, Danaher Corporation Laura Ulz, President, Cooper Tools, Inc. C. Thomas O’Grady, Senior Vice President, Business Development, Cooper Industries
Steve Breitzka will also be on the Board as a non-voting member.

Summary

The Danaher Tool Group has played an important role in the evolution of Danaher and in the development of the Danaher Business System. Today’s announcement is a result of continuing to look for ways to accelerate growth and improve the market position for the Danaher Tool Group.

The combination with Cooper Tools, Inc. enhances DTG’s future prospects for sustainable growth because of the product and geographic synergies between the two businesses as well as the investment potential offered by increased scale available to a larger tool business.
The tool businesses of Danaher and Cooper are very complementary. Whereas Danaher has market leadership and significant resources focused in the US and China, Cooper’s strengths are in the US, Latin America, Europe, and Australia. Both organizations have a professional hand tool division, but Cooper has additional product lines focused on power tools, electrical tools, and products in adjacent categories which Danaher does not have. Similarly, Danaher’s position in key tool and geographic markets is expected to provide incremental revenue opportunities for the new organization. Finally, there are market dynamics unique to the personal and professional tool industry that will enable the new organization, with larger scale and commercial resources than either Danaher or Cooper have on their own, to be better positioned to capitalize on exciting opportunities in the future.

Danaher businesses included in the new organization are Easco Hand Tools, Kingsley Tools, Inc., Jacobs Chuck, Delta Consolidated Industries, Iseli Corporation, Shanghai SATA Tools Manufacturing Co. Ltd., Danaher Tool Shanghai, Ltd., Leaway, Piccadilly Precision, and Spline Gauges, as well as all the legal affiliates of these businesses.

Other companies that comprise Danaher’s Tools and Components Segment (Matco, Hennessy, Jacobs Vehicle Systems) are not part of this transaction. These businesses have unique market positions and customer value propositions which are distinct from the strategic direction of the new organization, and therefore they will remain part of Danaher.

Looking Ahead

While Danaher Tool Group and Cooper Tools, Inc. associates will be employed by the new organization, some provisions have been made to allow for associates to move back to Danaher or Cooper, respectively. In the coming months, it will be important for all associates involved to focus on the success of the new organization, so transferring associates to Danaher and Cooper will be limited. But a clear methodology with Board of Directors involvement has been established to facilitate the transfer of associates to Cooper and Danaher when needs arise.
Until the joint venture closes, the businesses will continue to run as they do today.

On a personal level, I have known Cooper’s CEO Kirk Hachigian for more than 10 years. In 2001, when Danaher extended an offer to purchase Cooper Industries, the opportunities resulting from combining both companies’ tool businesses were central to that conversation. While Danaher eventually decided not to acquire Cooper, I am pleased to be realizing the promise together with Kirk and Cooper that we think will result from combining these great organizations.

Congratulations to the associates in the Danaher Tool Group as they enter into this new phase and position the new organization to take market share and capitalize on exciting opportunities in the coming months and years ahead.