Published: Thu, February 28, 2019
Medicine | By Daryl Nelson

GE surges after agreeing to US$21.4B sale of BioPharma unit

GE surges after agreeing to US$21.4B sale of BioPharma unit

(The firm doesn't set price targets.) By his math, "I$3 f GE's remaining health-care businesses have an enterprise value of $36 billion, when added to the roughly $21 billion GE will now receive for its Biopharma business ($20.5 billion after taxes plus $0.4 billion assumption of its underfunded pension plan), Culp has effectively unlocked about $10 billion of additional value".

GE shares opened almost 14 percent higher at $11.57 on February 25 while Danaher stock was up just over 9 percent at $123.94 at the open.

The biopharma unit is part of GE Life Sciences, which also includes medical devices and pharmaceuticals diagnostics. The mostly-cash transaction is expected to close in the fourth quarter of this year. Culp, who became chief executive officer after the surprise ouster of John Flannery in October, has already announced an overhaul of the ailing power-equipment business, stepped up cost cuts and revamped a divestiture of GE's locomotive unit to increase cash potential.

Investors apparently agree, as Danaher stock - which had gained 7.8% by 11:40 a.m. EST - is going up in tandem with GE's.

The transaction is the first big play by new GE CEO Lawrence Culp in a turnaround plan aimed at alleviating the conglomerate's crippling level of debt, and a run of poor quarterly results held back by its troubled power division. Still, management at GE thinks it should be able to clear all hurdles and close this sale by the end of the year.

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

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That's why it's called personal, because it's something for you and your family, and I feel happy with it", she added. When Gaga returned to the audience after winning her first Oscar , Shayk was seen hugging.

GE officials made the announcement on Monday. The verdict is not universal that Danaher stole the company, but the reports all had something positive to say about the deal.

As noted in our GE Topic notes late past year, the Life Science assets at General Electric were elite businesses within the Bio-Production and Life Science Markets and worth about $25 billion.

Janney's note further said that Danaher seems to have struck a good value with the GE LS acquisition priced 17x EBITDA.

Danaher shares were advancing 8.97 percent to $123.66 premarket.

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. The health-care business was one of GE's better cash-generating assets and, one way or another, it likely will be gone eventually. "So folks don't look at us like a desperate seller", he said. In 2018, it acquired Integrated DNA Technologies, which makes products for gene-sequencing and editing for $2 billion. 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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