Market Overview

GE Divests BioPharma Business to Danaher In $21.4-Billion Deal

GE Divests BioPharma Business to Danaher In $21.4-Billion Deal

General Electric Company (NYSE: GE) shares were rallying sharply Monday in reaction to an announcement from the company on the sale of its biopharma business. 

What Happened

In the first divestment under the new CEO Lawrence Culp, who assumed office in October, GE said it has agreed to sell its biopharma business to Danaher Corporation (NYSE: DHR). The deal carries a price tag of $21.4 billion, including $2.1 billion in cash as well as Danaher assuming certain pension liabilities.

The biopharma division is part of the GE Life Sciences business and generated revenue of $3 billion in 2018. The unit provides instruments, consumables and software to support R&D, process development and manufacturing workflows for biopharmaceutical drugs.

GE said the pharmaceutical diagnostics business, also a part of GE Life Sciences, will remain within the GE Healthcare portfolio. The health care business — excluding biopharma — generated revenue of $17 billion and a mid-teens operating profit margin in 2018.

The deal is expected to close in the fourth quarter of 2019, contingent on regulatory approvals and customary closing conditions.

GE clarified that the deal is not subject to a financing condition or a shareholder vote.

Why It's Important

GE said it intends to use the net proceeds to reduce leverage and strengthen its balance sheet.

The once-sprawling conglomerate has been pursuing a strategy of divesting non-core businesses in a bid to shore up its top- and bottom-line. GE has gradually divested its finance business in order to strengthen its industrial business.

In pre-market trading Monday, GE shares were jumping 14.26 percent to $11.61, their highest level since late October.

Danaher shares were advancing 8.97 percent to $123.66 premarket. 

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