Published: Wed, February 27, 2019
Health Care | By Cedric Leonard

GE to sell life sciences business for $21.4 billion

GE to sell life sciences business for $21.4 billion

The shares soared Monday as Culp took his boldest step yet to rescue the troubled behemoth, agreeing to sell GE's bio-pharmaceutical business to his former employer, Danaher Corp., for $21.4 billion. That's as part of GE's group-wide efforts to reduce debts and restructure.

"We view the acquisition as highly strategic, as [Danaher] gains access to GE's coveted bioprocessing assets, where GE is the leader in downstream chromatography, highly complementary to Pall's upstream dominant filtration position - not to mention GE's high margin upstream business in cell culture and single use technologies", Brennan wrote.

GE will shelve plans for the initial public offering as it turns its attention to completing the deal with Danaher, Culp said.

"It demonstrates that we are executing on our strategy by taking thoughtful and deliberate action to reduce leverage and strengthen our balance sheet", he said in a statement.

The firm has expanded into manufacturing aircraft engines and turbines for power generation, as well as healthcare and finance. At the end of past year, the company's interest-bearing liabilities had ballooned to 110 billion dollars.

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The massive all-cash deal will greatly boost Danaher's $6.5 billion life sciences unit, with the GE business expected to post $3.2 billion in revenue this year. Meanwhile, GE keeps a large proportion of its health assets including the profitable imaging and diagnostics business, which is an important contributor to cash flow. Danaher said the segment would be set up as a standalone company within its own $6.5 billion life sciences business.

The verdict is not universal that Danaher stole the company, but the reports all had something positive to say about the deal. He is GE's first CEO to be hired from outside the company. This includes revenue of about $3.20 billion for 2019. And given GE's CEO's close familiarity with both companies and presumed warm feelings for his old place of employ, it makes sense that this deal would appeal to both buyer and seller.

The sell-off throws cold water on the giant's plans to spin out GE Healthcare through an IPO, Culp said in a Monday interview with Bloomberg.

"A more focused portfolio is the right structure for GE, and we have many options for maximizing shareholder value along the way", Chief Executive Officer Lawrence Culp said. It includes instruments, supplies and software for the goal of research, discovery, process development and manufacturing workflows of biopharmaceutical drugs.

GE had been considering a spinoff of the entire healthcare business but the sale of the biopharma unit gives it an opportunity to pare down debt. GE Healthcare had filed confidential paperwork to begin the IPO process last December.

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