IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO (the Jurisdiction)
AND
IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS
IN MULTIPLE JURISDICTIONS
AND
IN THE MATTER OF DANAHER COMPANY (the Filer)
DECISION
Background
The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction (the Legislation) for an exemption (the Exemption Sought) from the prospectus requirement in section 53 of the Securities Act (Ontario) in connection with the proposed distribution (the Spin-Off) by the Filer of 100% of the shares of common stock (Veralto Shares) of Veralto Corporation (Veralto), a wholly-owned subsidiary of the Filer, by way of a dividend in specie to holders (Filer Shareholders) of shares of common stock of the Filer (Filer Shares) resident in Canada (Filer Canadian Shareholders).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):
(a) the Ontario Securities Commission is the principal regulator for this application; and
(b) the Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11102 Passport System (MI 11-102) is intended to be relied upon in each of the other provinces and territories of Canada.
Interpretation
Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.
Representations
This decision is based on the following facts represented by the Filer:
The Filer is a Delaware corporation with a principal executive office located at 2200 Pennsylvania Avenue, NW, Suite 800W, Washington, District of Columbia, 20037. The Filer is a global science and technology company that operates worldwide through its four segments: Biotechnology, Life Sciences, Diagnostics, and Environmental & Applied Solutions (the EAS Business).
The Filer is not a reporting issuer and currently has no intention of becoming a reporting issuer under the securities laws of any province or territory of Canada.
The authorized capital of the Filer consists of 2,000,000,000 shares of common stock, U.S.$0.01 par value per share, and 15,000,000 shares of preferred stock, without par value. As at April 20, 2023, there were 737,898,789 shares of common stock issued and outstanding and no shares of preferred stock issued and outstanding.
The Filer Shares are listed on the New York Stock Exchange (the NYSE) and trade under the symbol “DHR”. The Filer also has (i) 1.700% Senior Notes due 2024, (ii) 0.200% Senior Notes due 2026, (iii) 2.100% Senior Notes due 2026, (iv) 1.200% Senior Notes due 2027, (v) 0.450% Senior Notes due 2028, (vi) 2.500% Senior Notes due 2030, (vii) 0.750% Senior Notes due 2031, (viii) 1.350% Senior Notes due 2039, (ix) 1.800% Senior Notes due 2049 and (x) Series B Preferred Shares listed on the NYSE and which trade under the symbols “DHR 24”, “DHR/26”, “DHR 26”, “DHR/27”, “DHR/28”, “DHR 30”, “DHR/31”, “DHR/39”, “DHR/49”, “DHR.PRB”, respectively. No securities of the Filer are listed or posted for trading on any stock exchange or other regulated market in Canada. The Filer has no present intention of listing its securities on any Canadian stock exchange.
The Filer is subject to the United States Securities Exchange Act of 1934, as amended (the 1934 Act) and the rules, regulations and orders promulgated thereunder.
Based on a geographic survey prepared for the Filer by Computershare Trust Company, N.A., as of May 24, 2023, there were 6 registered Filer Canadian Shareholders holding approximately 3,266 Filer Shares, representing holdings of approximately 0.0004% of the outstanding Filer Shares (calculated on the basis of 737,898,789 Filer Shares issued and outstanding as at April 20, 2023, as indicated in the Filer’s quarterly report on Form 10-Q dated April 25, 2023). The Filer does not expect these numbers to have materially changed since the dates mentioned above.
Based on a geographic survey of beneficial shareholders prepared for the Filer by the Depository Trust Company, as of June 1, 2023, there were 23 Canadian institutions that hold 6,931,933 Filer Shares on behalf of Canadian beneficial shareholders, representing approximately 0.94% of the outstanding Filer Shares (calculated on the basis of 737,898,789 Filer Shares issued and outstanding as at April 20, 2023, as indicated in the Filer’s quarterly report on Form 10-Q dated April 25, 2023). The Filer does not expect these numbers to have materially changed since the dates mentioned above.
Based on the information above, the number of registered and beneficial Filer Canadian Shareholders and the proportion of Filer Shares held by such shareholders are de minimis.
Veralto is a corporation formed under the State of Delaware. Veralto’s principal executive office will be located in Waltham, Massachusetts. It is a wholly-owned subsidiary of the Filer that, at the time of the Spin-Off, will hold the Filer’s EAS Business.
All of the issued and outstanding Veralto Shares are held, indirectly through a subsidiary, by the Filer. No other securities of Veralto are issued and outstanding.
On September 14, 2022, the Filer announced its intention to establish the EAS Business segment as a separate publicly traded company named Veralto. The separation is expected to be completed by way of a transfer of certain assets and liabilities of the EAS Business, to Veralto or its subsidiaries through certain restructuring transactions and a pro rata distribution of all of the outstanding Veralto Shares to holders of Filer Shares pursuant to the Spin-Off. The Filer will distribute 100% of the Veralto Shares to the holders of Filer Shares as of the record date for the distribution on the basis of a fixed distribution ratio to be determined. At the time of the Spin-Off, Veralto will hold, directly or indirectly, through its subsidiaries, the EAS Business.
The distribution agent for the distribution will distribute to each holder of Filer Shares entitled to Veralto Shares in connection with the Spin-Off the number of whole Veralto Shares to which the holder of Filer Shares is entitled in the form of a book-entry credit. No fractional Veralto Shares will be issued in connection with the Spin-Off. The distribution agent will aggregate fractional shares into whole shares, sell the whole shares in the open market at prevailing prices and distribute the net cash proceeds (net of brokerage fees and commissions, transfer taxes and other costs) from the sales pro rata to each holder of Filer Shares who would otherwise have been entitled to receive a fractional share in the distribution (net of any required applicable withholding taxes). Recipients of cash in lieu of fractional shares will not be entitled to any interest on the amounts of cash payments made in lieu of fractional shares.
Filer Shareholders will not be required to pay any cash, deliver any other consideration, surrender or exchange their Filer Shares or take any other action to receive their Veralto Shares. The Spin-Off will occur automatically without any investment decision on the part of the Filer Shareholders.
Subject to the satisfaction of certain conditions, including obtaining final approval from the Danaher Board of Directors, satisfactory completion of a cash distribution using the proceeds of financing, receipt of tax opinions, receipt of favorable rulings from the Internal Revenue Service and receipt by the Filer of all necessary approvals of the United States Securities and Exchange Commission (the SEC), it is currently anticipated that the Spin-Off will become effective on or about October 2, 2023.
Following completion of the Spin-Off, holders of Filer Shares as of the record date for the Spin-Off will own 100% of the Veralto Shares and Veralto will cease to be a subsidiary of the Filer and will become a separate, publicly-traded company.
Following the completion of the Spin-Off, the Filer Shares will continue to be listed and traded on the NYSE. The Veralto Shares have been approved for listing on the NYSE under the symbol “VLTO”.
Veralto will not be a reporting issuer in any jurisdiction of Canada nor will its securities be listed on any stock exchange in Canada.
The Spin-Off is being effected in accordance with the laws of Delaware.
Because the Spin-Off will be effected by way of a dividend of Veralto Shares to holders of Filer Shares, no shareholder approval of the Spin-Off is required (or being sought) under the laws of Delaware or any applicable United States federal securities laws.
On August 3, 2023, Veralto filed a registration statement on Form 10 with the SEC detailing the proposed Spin-Off (the Registration Statement). On August 30, 2023, the SEC declared the Registration Statement effective. The Registration Statement can be accessed at https://www.sec.gov/Archives/edgar/data/1967680/000162828023031040/v eraltoform10-12ba.htm.
After the SEC has completed its review of the Registration Statement, Filer Shareholders will receive a notice of internet availability of an information statement with respect to Veralto (the Information Statement) detailing the terms and conditions of the Spin-Off. All materials relating to the Spin-Off sent by or on behalf of the Filer to Filer Shareholders resident in the United States (including the Information Statement) will be sent concurrently to Filer Canadian Shareholders.
The Information Statement will contain “prospectus-level” disclosure about Veralto within the meaning of Canadian securities legislation and market practices (it being understood that such “prospectus-level” disclosure will be prepared in accordance with the form requirements of the SEC).
Following completion of the Spin-Off, Veralto will be subject to the requirements of the 1934 Act and the rules and regulations of the NYSE. Veralto will send concurrently to holders of Veralto Shares resident in Canada the same disclosure materials required to be sent under applicable United States securities laws to holders of Veralto Shares resident in the United States.
Filer Canadian Shareholders who receive Veralto Shares pursuant to the Spin-Off will have the benefit of the same rights and remedies in respect of the disclosure documentation received in connection with the Spin-Off that are available to holders of Filer Shares resident in the United States.
There will be no active trading market for the Veralto Shares in Canada following the Spin-Off and none is expected to develop. Consequently, it is expected that any resale of Veralto Shares distributed in the Spin-Off will occur through the facilities of the NYSE or any other exchange or market outside of Canada on which the Veralto Shares may be quoted or listed at the time that the trade occurs or to a person or company outside of Canada.
The Spin-Off to Filer Canadian Shareholders would be exempt from the prospectus requirement pursuant to subsection 2.31(2) of National Instrument 45-106 – Prospectus Exemptions but for the fact that Veralto is not a reporting issuer under the securities legislation of any jurisdiction in Canada.
Neither the Filer nor Veralto is in default of any securities legislation in any jurisdiction of Canada.
Decision
The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.
The decision of the principal regulator under the Legislation is that the Requested Relief is granted provided that the first trade in Veralto Shares acquired pursuant to the Spin-Off will be deemed a distribution that is subject to section 2.6 of National Instrument 45-102 Resale of Securities.
DATED at Toronto this 15th day of September, 2023.
“Lina Creta”
Lina Creta
Manager, Corporate Finance
Ontario Securities Commission
OSC File #: 2023/0303