Leica Geosystems ripe for Hexagon takeover

Leica makes advanced measuring technology Keystone

Leica Geosystems will be taken over by Hexagon after rival bidder Danaher effectively withdrew its offer, a market expert tells swissinfo.

Zurich Cantonal Bank analyst Serge Rotzer says shareholders in the Swiss measuring technology group are now certain to take Hexagon’s money.

The United States firm Danaher said on Thursday it had sold all 95,000 of its shares in the Swiss measuring technology group.

It comes after Danaher indicated it would not up its offer of SFr500 ($395) per Leica share after Swedish company Hexagon trumped its bid by tabling SFr573.

Hexagon says it is confident that its SFr1.44 billion ($1.14 billion) valuation will persuade Leica Geosystems’ shareholders to accept its improved offer.

Leica Geosystems, however, remains neutral, saying that Danaher have only lost interest “on paper” and that their takeover offer still stands until the expiry date later this month.

swissinfo: Does Danaher’s refusal to raise its offer give Hexagon the green light to take over Leica Geosystems?

Serge Rotzer: In all probability Leica Geosystems now can’t avoid a takeover from Hexagon as the only thing they had to avoid this before was a White Knight in the shape of Danaher, who now appear to be out of the picture.

The Leica board rejected the initial offer from Hexagon because they felt that it was too low and because it was a hostile bid. Since Hexagon conducted a due diligence review the bid became friendly and Leica have taken a neutral stance.

I expect Leica’s shareholders to accept the Hexagon bid because the price is attractive and they stand to make a good profit. If Hexagon goes the share price will probably fall. The only question is how many shares Hexagon can buy. It may be 60 or 70 per cent or even more.

swissinfo: Would a Hexagon takeover make sense strategically?

S.R.: Hexagon are in the same business as Leica [measurement technology] and the two companies even share some of the same customers, so they can have good synergies. For example, Airbus is a customer of both. Leica does measurements for aircraft doors and Hexagon for the wings.

Danaher is not in this business, but saw Leica as a good investment.

swissinfo: Why have Danaher lost interest in Leica Geosystems?

S.R.: Hexagon’s business is better so they can pay more for Leica Geosystems. Danaher don’t see Leica as a good investment any more after Hexagon raised its bid.

swissinfo: Could there be any other companies stepping in to raise a bid?

S.R.: Leica Geosystems said in the past that there are other companies interested, but only Danaher came forward.

swissinfo-interview: Matthew Allen

Key facts

Hexagon launched a hostile takeover bid for Leica Geosystems in June, offering SFr440 per share.
Danaher stepped in with a white-knight offer in July of SFr500, which Leica’s board recommended to shareholders.
Hexagon’s subsequent due diligence review and increased offer of SFr573 last month persuaded Leica’s board to take a neutral stance.

In brief

Leica Geosystems is almost 200 years old.

The company is active worldwide and has its headquarters in Heerbrugg near St Gallen.

It employs more than 2,400 people in 23 countries, with 900 in Switzerland.

Leica Geosystems recorded a net profit of SFr50.6 million on sales of SFr773 million in its last fiscal year.