-- On the Purchase of Tektronix by Danaher Group
BEIJING, Nov. 28 /Xinhua-PRNewswire/ -- CCID Consulting, China’s leading research, consulting and IT outsourcing service provider, and the first Chinese consulting firm listed in Hong Kong (Hong Kong Stock Exchange: HK08235), recently released its article on China’s cooperation between Great Powers in 2007Q3
Nowadays, the competition among enterprises is just like dice games and many soul-stirring stories that are worth chewing over have been created when great powers meet. A recent event in the global testing and measurement field has brought along a new topic: Whether the cooperation between great powers would lead to a win-win result?
On October, 20, 2007, the testing and measurement manufacturers Tektronix and Danaher Group jointly declared that Tektronix would sell all its public shares to Danaher Group at a price of US$38 per share and the total selling price was about US$2.8 billion. This price includes the debts, transference expenses as well as certain net cash.
Danaher Group is a tycoon in the American precision instrument and automatic control field and is developing constantly through purchasing leading companies in the industrial field. The global sales volume of Danaher Group topped US$10 billion in 2006. Tektronix is a global leading measurement instrument manufacturer (especially in the oscilloscope field) and its sales value in 2006 was US$1.04 billion. But will the two powers in the precision instrument and automatic control field and the testing and measurement field become stronger through win-win cooperation? It is unknown yet, but it is certain that the competition pattern in the global testing and measurement field would be changed after with the purchase.
Table 1: TOP 10 Testing and Measurement Instrument Manufacturers in the World in 2006
Unit: 100 million US dollars
Company Country Top 10 Top 10 in Income in Income in Growth
2006 2005 2006 2005 rate
Agilent America 1 1 34.2(1) 32.7 5 %
Advantest Japan 2 2 20.0 21.4 -7 %
Teradyne America 3 3 13.8 10.8 28 %
Tektronix America 4 4 10.4 10.3 1 %
Fluke America 5 5 10.1(2) 9.5 6 %
Anritsu Japan 6 6 8.4 7.7 9 %
Verigy America 7 -- 7.8 4.6 70 %
NI America 8 7 6.7 5.7 18 %
Aeroflex America 9 8 5.5 4.6 20 %
JDSU America 10 -- 4.9 -- --
Source: CCID Consulting; Nov. 2007
Note: (1) The annual sales of Agilent do not contain the income from
biological analysis and measurement (US $1.55 billions).
(2) The value is forecasted according to the growth rate (7%) of the
electronic test business of Danaher in 2006.
Table 1 shows the Top 10 testing and measurement instrument manufacturers in the world in 2006. It is seen that the yearly income of Tektronix was US$1.04 billion in 2006, ranking the fourth after Agilent, Advantest and Teradyne. Its sales value and place in the market were basically the same as that in 2005. Fluke closely followed Tektronix with a yearly income of US $1.01 billion. Agilent had moderate performance in 2006 with the annual growth rate being 5% and it held the first position as to the gross business scale. Teradyne grew at a rate of 28%, but was still much behind Agilent as to the gross business volume. Advantest failed to continue the sound performance in 2005 and its growth rate in 2006 was -7%.
Despite the higher brand awareness in the general testing and measurement field and the top market position on oscilloscope and logic analyzer, Tektronix has no apparent advantage as compared with Agilent on the whole.
Nowadays, the competition pattern in the testing and measurement field is expected to change after the purchase of Tektronix by Danaher. Fluke is a solely-funded subsidiary company of Danaher Group. After Tektronix was purchased by Danaher, it would be in the same department as Fluke and their sales volume would reach US$2.05 billion totally, surpassing Advantest and ranking second in the market. The realization of the new Fluke-Tek mode needs the integration of the testing and measurement business by Danaher Group. According to CCID Consulting, Danaher would reserve the Tektronix brand and integrate it with the electronic measurement business of Fluke effectively by making full use of the brand awareness and influence of Tektronics in the high-end testing and measuring instrument market. Such integration may not be accomplished in an action smoothly and such integration would bring along both pressure and opportunity to the main competitor, Agilent. After Danaher purchased Tektronix, Agilent lost a powerful competitor but ushers in a more powerful enemy.
Table 2: Income of Agilent in the Four Fiscal Seasons of 2007
Unit: 100 million US dollars
Fiscal Income Growth Obstructive factor
season rate Driving factor
1 12.8 10 % The wireless handheld The biological analysis and
testing equipment measurement business grew
market was sluggish fast with the profit growth
rate being 22%
2 13.2 7 % The wireless handheld The biological analysis and
testing equipment measurement business grew
market was sluggish fast
3 13.7 11 % The Asian electronic It purchased Stratagene and
measurement market, combined the life science
especially the market reagents of Stratagene with
in Japan, was sluggish its analytical tools to drive
the development
4 14.2 7 % The electronic The biological analysis and
(E) measurement market in measurement business held
Japan was sluggish over the fast growth rate
and the electronic
measurement business is
expected to return to the
normal track of long-term
development.
Source: CCID Consulting; Nov. 2007
As shown in Table 2, the growth rate of Agilent in the first three fiscal seasons of 2007 was above 7% respectively. Despite the influence from the sluggish electronic measurement market in Asia and Japan, the performance of Agilent in 2007 was steady and its biological analysis and measurement business drove its overall growth. Agilent would keep the annual growth rate of 8%-12% owing to the sound development of biological analysis and measurement business.
What is the result of the win-win cooperation between Danaher Group and Tektronix? It depends on the integration between Fluke and Tektronix within Danaher Group, and it needs to be verified during the competitions with other competitors (Agilent for instance) after the integration.
About CCID Consulting
CCID Consulting Co., Ltd. (hereinafter known as "CCID Consulting"), the first Chinese consulting firm listed in the Growth Enterprise Market of the Stock Exchange (GEM) of Hong Kong (stock code: HK08235), is directly affiliated to the China Center for Information Industry Development (hereinafter known as CCID Group). Headquartered in Beijing, CCID Consulting has set up branch offices in Shanghai, Guangzhou, Shenzhen, and Harbin, with over 300 professional consultants and industry experts. The company’s business covers over 200 large and medium-sized cities in China. Apart from home market development, CCID Consulting establishes international cooperation links across the United States, the Asia-Pacific region and Europe with agents in the U.S., Japan, South Korea, Australia, Singapore, Italy and Russia, with the aim of going global.
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