GE sells biopharma business to Danaher for $21.4B, reconsiders healthcare IPO

GE Stock Is Soaring on the Biggest Asset Sale Yet Under CEO Larry Culp

GE sells off BioPharma business to Danaher for $21.4B

The biopharmaceutical division has been performing well, accounting for about $3 billion of the $20 billion in revenue that G.E.'s health care unit generated past year as a whole. An IPO for GE Healthcare this year is now in doubt, Culp said.

"GE Biopharma is renowned for providing best-in-class bioprocessing technologies and solutions", said Danaher CEO Tom Joyce after Monday's agreement.

GE said this month that it would downsize its world headquarters in Boston and return $87 million in incentives it received from MA for moving from CT three years ago. The net purchase price of about $20 billion, after anticipated tax benefits, represents a multiple of some 17 times expected EBITDA this year, Danaher said. Beyond using cash on hand along with new debt or credit facilities, the company expects to raise about $3 billion through an equity offering to finance the buyout. The deal will raise $21.4 billion for GE, which is racing to fix its debt-riddled balance sheet by selling off major pieces of its empire.

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Washington-based Danaher said it plans to run GE Biopharma as a stand-alone unit within its life sciences business. The transaction is expected to close in the fourth quarter of 2019, subject to regulatory approvals and customary closing conditions. In 2016, for instance, it bought the molecular diagnostics and medical testing business Cepheid for about $4 billion. "It lost two-thirds of its market value in the last two years amid a series of operational and investment missteps". There may just be one problem - GE's Larry Culp, who was already looking at an entire healthcare unit sale (along with other units in GE) may have given the unit away on the cheap. We noted previously the value of the GE Life Sciences locked up within their Healthcare division. It provides instruments, consumables and software that support the research, discovery, process development and manufacturing workflows of biopharmaceutical drugs. The remaining parts posted about $17 billion in revenue previous year, the company stated, with operating profit margins in the mid-teens.

- "Today's transaction is a pivotal milestone", Culp said in the statement.

Before saying that Danaher stole the deal, the metric here is that some speculation had been in the market that unit of GE was worth perhaps $25 billion. "This likely means a slower grind for the stock.though we have faith in achievability". In October, it fired CEO John Flannery, replacing him with Lawrence Culp, himself the former CEO of Danaher. The CEO explained that their strategy would be reducing leverage and ultimately strengthen the 128-year old company's bottom line.

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