Bloomberg News

Danaher, Cooper Said to Seek Sale of Apex Tool Venture

March 26, 2012

Danaher Corp. (DHR) and Cooper Industries (CBE) Plc are seeking buyers for a joint venture that makes hand tools for Sears Holdings Corp.’s Craftsman brand, said two people with knowledge of the matter.

The venture, Apex Tool Group, may fetch $1.5 billion or more and attract interest from private-equity firms, said one of the people, who spoke on condition of anonymity because the talks are private. Goldman Sachs Group Inc. (GS) is advising on the potential sale, the people said.

The owners of Apex join United Technologies Corp. and DuPont Co. in seeking private-equity bids for major divisions this year. U.S. leveraged-buyout investors are looking to put to work the $425 billion of unspent capital commitments they had at the end of 2011, according to Pitchbook Data Inc.

The tool unit no longer fits either Danaher’s or Cooper’s growth strategy, and investors have expected Apex to be sold, said Jeffrey Sprague, an analyst with Vertical Research Partners. He has hold ratings on Danaher and Cooper.

“They struck the joint venture fully intending to someday part ways with it and sell,” Sprague said.

Apex, based in Sparks, Maryland, describes itself as one of the world’s largest makers of hand and power tools. It has dozens of its own brands, including GearWrench ratchets, and makes some of the tools sold by Sears. Apex had net income of $134 million on sales of $1.46 billion last year, according to a Cooper regulatory filing. Apex employs 7,600 people, according to its website.

Formation in 2010

Danaher and Cooper formed Apex in 2010 by combining their tool businesses and naming Steve Breitzka, previously the head of the Danaher tool unit, chief executive officer. Each has a 50 percent stake.

Cooper rose 0.8 percent to $63.43 in New York at 1:36 p.m. Danaher rose 1.1 percent to $54.95. Both stocks had gained 16 percent this year before today.

A Cooper spokesman, Kyle McClure, declined to comment beyond a statement his chief financial officer made at a February meeting. “We’re considering all options and opportunities that might present themselves with respect to that business,” CFO David Barta told investors then. Cooper is incorporated in Dublin and has administrative headquarters in Houston.

Valuation

Matt McGrew, a spokesman for Washington, D.C.-based Danaher, didn’t respond to a phone call or e-mail. Michael DuVally, a Goldman Sachs spokesman, declined to comment.

Snap-On Inc. (SNA), the Kenosha, Wisconsin-based maker of tools and diagnostic equipment for the auto repair industry, had a stock market value last week of about 13 times 2011 net income. Applying that multiple to Apex would value the venture at about $1.7 billion.

United Technologies is seeking buyers for three units that make pumps and compressors, in a sale that people with knowledge of the effort said in February may be worth $2 billion or more. DuPont is seeking buyers for an auto-paint unit that may be worth $4 billion, people with knowledge of that sale process said in October.

To contact the reporter on this story: Zachary R. Mider in New York at zmider1@bloomberg.net; Thomas Black in Dallas at tblack@bloomberg.net

To contact the editor responsible for this story: Jennifer Sondag at jsondag@bloomberg.net


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