EVERETT — Fortive, the new Fortune 500 company that is headquartered in Everett, separated from Danaher Corp. over the weekend and started trading today on the New York Stock Exchange under the symbol “FTV.”
Fortive is a collection of companies with $6.2 billion in revenues last year, including the Fluke Corp. in Everett. Fortive’s headquarters is located at the Fluke site at 6920 Seaway Boulevard.
“Today marks a major milestone for Fortive as we bring to the market our strong heritage and experienced management team, leading market positions, and culture of continuous improvement that is deeply rooted in 24,000 associates around the world,” said James A. Lico, president and CEO of Fortive, in a statement.
The company’s stock closed Tuesday at $48.60 a share and had 345 million shares. That gives it a market capitalization of about $16.75 billion.
To put that in perspective, Fortive is the eighth-largest publicly traded company in Washington based upon market cap, the value of a company factoring the price of its shares compared with the total number of stocks. That places it behind Paccar and ahead of Expedia, according to a Nasdaq listing. Others on the list include Microsoft, Amazon, Costco and Starbucks. It’s also the largest publicly traded company in the state outside of King County.
Danaher stockholders received one share of Fortive common stock for every two shares of Danaher common stock held as of the close of business on June 15.
Fortive aims to be a leader in professional instrumentation, automation, sensing and transportation technologies. Fluke fits under that umbrella as a test- and measurement-equipment company.
Danaher will focus on health care and life sciences.
Danaher, based in Washington, D.C., announced last year that it intended to break into two publicly traded companies, one that would retain the name Danaher and the other becoming Fortive. Danaher’s $13.8 billion acquisition of Pall Corp. in May 2015 sparked the decision to spin off the industrial business.
In an SEC filing on June 15, the Danaher board of directors said that separating was in the best interest of the company and stockholders because it would allow Fortive and Danaher to “more effectively pursue their distinct operating priorities and strategies and enable management of both companies to focus on unique opportunities for long-term growth and profitability.”
The move also comes with risk. Fortive will be smaller in size and so will its purchasing power, meaning it may be unable to obtain goods and services at prices as favorable as Danaher was able to obtain, according to the filing. The separation means a disruption that could affect both Fortive’s and Danaher’s operations. And Fortive will incur costs with the transition.
For one, Fortive is borrowing $3.25 billion, of which approximately $3 billion will be paid to Danaher as consideration for the companies and other assets its receiving in the separation, according to the filing.
An analyst told Bloomberg news service that Fortive’s strategy will the same as Danaher’s, which was founded in the 1980s by billionaire brothers Steven and Mitchell Rales. (They named Danaher after a tributary of the Flat Head River in western Montana, where the two brothers conceived the company’s strategy during a fishing trip.)
Danaher has averaged 10 acquisitions per year in the last decade while widening profit margins.
“The board and the senior management have been doing this for quite some time and they’ve had a lot of success.” said Jeff Windau, an analyst with Edward Jones, to Bloomberg.
Fortive’s senior managers, who are veterans of Danaher, have made more than 200 acquisitions. The spinoff has the power to make $3 billion of acquisitions over the next two or three years, Fortive CEO Lico said in a presentation June 21, according to Bloomberg.
Fortive opening its headquarters in Everett brings only a small number of employees. The company has estimated about 50 corporate employees would be at its headquarters. But community leaders are already hailing the arrival of such a large corporation in the community.
Lico was recognized in May with the John M. Fluke Sr. Community Leader Award. He was praised for his community involvement with the Edmonds Center for the Arts, Cocoon House and United Way of Snohomish County. He lives in Seattle with his wife, Maureen, and three children.
He wasn’t at the award ceremony, but sent a message: “I’m so excited to be associated with Fortive and our terrific group of employees. You have our commitment that we will continue to be a strong partner, making Snohomish County a great place to live and work.”
Last year, as it was still forming, Fortive listed 22 companies as its subsidiaries. On Tuesday, the company listed 16 on its website. The closest subsidiary to Fluke Corp. is Tektronix in Portland. Oregon.
Other companies under the Fortive umbrella include: Anderson-Negele; Gems Sensors &Controls; Gilbarco Veeder-Root; Hennessy Industries; Invetech; Jacobs Vehicle Systems; Kollmorgen; Matco Tools; Pacific Scientific EMC; Portescap; Qualitrol; Setra; TeletracNavman; and Thomson.
Bloomberg news service contributed to this report.
Jim Davis: 425-339-3097; jdavis@heraldnet.com.
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