GE to off-load biopharma business

GE sells off BioPharma business to Danaher for $21.4B

GE sells off BioPharma business to Danaher for $21.4B

In a $21.4 billion deal, General Electric will narrow its portfolio by selling its biopharma business to Danaher, a Washington, D.C. -based corporation that has become a larger player in life sciences over the past few years through acquisitions.

GE's biopharma business, which provides tools to support biopharmaceutical research and development, brought in roughly $3 billion in revenue in 2018.

The announcement also further eased concerns about GE's solvency that had grown markedly previous year, reflected in a surge in the price for GE credit default swaps, a form of insurance against default, during the fourth quarter. At the time, GE Chief Financial Officer Jamie Miller said GE had been attracting interest on some of its business units but was "looking to do deals that are smart for the company".

Shares of GE opened up more than 13 percent on the New York Stock Exchange following the news Monday.

"This news meaningfully accelerates our deleveraging plan", said Culp, who took the reins at GE in October.

General Electric has agreed to sell its biopharmaceutical business to Danaher for $21.4bn. Still, management at GE thinks it should be able to clear all hurdles and close this sale by the end of the year. So by selling off the unit for $21 billion in capital that will be coming into GE, it also added nearly $7 billion in market to end with a $94 billion market value.

Culp told CNBC that GE made a decision to break up the Life Sciences unit as the biopharma business is distinct from the pharmaceutical diagnostics business.

GE received plenty of interest in the bio-pharma operations, Culp said, and the deal with Danaher came together over the past few months.

Shares of GE (GE), which has a debt of more than $100 billion, have fallen more than 80 percent from their peak in August 2000.

GE also on Monday closed the merger of its transportation business with Wabtec. The health-care business was one of GE's better cash-generating assets and, one way or another, it likely will be gone eventually.

We think this is a natural fit for Danaher's existing business, and both eliminates a major competitor in this business and creates a wide moat and gap between DHR and other competitors. "We look forward to welcoming this talented team to Danaher".

GE also announced several upcoming events, including the release of its 10-K annual report this week and a presentation by Culp at a JPMorgan Chase & Co. conference March 5. In 2018, it acquired Integrated DNA Technologies, which makes products for gene-sequencing and editing for $2 billion. He is GE's first CEO to be hired from outside the company.

Danaher expects to finance the all-cash transaction with approximately $3 billion of proceeds from an equity offering (which may include an offering of mandatory convertible preferred shares), and the remainder from available cash on hand and proceeds from the issuance of debt and/or new credit facilities.

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