Danaher to combine communications business with NetScout

Reuters News
Posted: Oct 13, 2014 7:00 AM

(Reuters) - U.S. healthcare technology group Danaher Corp said it would become majority shareholder in network monitoring company NetScout Systems Inc through a stock deal that involves the merger of Danaher's communications business with NetScout.

Under the deal, Danaher shareholders will get NetScout shares worth $2.6 billion that will give them a 59.5 percent stake in the combined company.

Danaher will create a wholly owned subsidiary to hold its communications business and will distribute ownership of the business to its shareholders.

The combination is structured as a Reverse Morris Trust transaction, which allows a company to sell a unit in a tax-efficient manner by merging it with a smaller company.

Danaher's communications business, which offers network monitoring and cybersecurity services, reported 2013 revenue of about $836 million.

NetScout, which helps monitor software applications on networks, had a market value of $1.72 billion as of Friday and had revenue of $396 million in the year ended March 31.

The combined entity would have more than 3,000 employees, of which about 2,000 would come from Danaher.

After the close of the transaction in 2015, NetScout would continue to be led by Chief Executive Anil Singhal, who owns more that 5 percent of NetScout.

(Reporting by Supantha Mukherjee and Anya George Tharakan in Bangalore; Editing by Saumyadeb Chakrabarty)