Medicine

GE to sell biopharma business to Danaher for $21.4 bln

GE to sell biopharma business to Danaher for $21.4 bln

General Electric is selling its biopharma business to Danaher Corp. for $21.4 billion as the industrial giant continues to shed pieces of itself. That's as part of GE's group-wide efforts to reduce debts and restructure.

Shares of GE rocketed higher after the announcement.

GE received plenty of interest in the bio-pharma operations, Culp said, and the deal with Danaher came together over the past few months. GE said it planned to use the money to reduce its leverage and strengthen its balance sheet.

The firm has expanded into manufacturing aircraft engines and turbines for power generation, as well as healthcare and finance.

General Electric's (GE's) sale of its biopharma unit on February 25 is created to reduce the company's overall debt load, and CEO Larry Culp said the deal is the latest step in his plan to strengthen the whole of GE, particularly the company's struggling Power division. 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.

Once the deal completes, the GE unit will operate as a standalone company within Danaher's life sciences business, which is already a medley of previously acquired companies.

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Sources have also revealed that GE has put the initial public offering of its Biopharm business on hold until the entire deal is closed.

While GE embarks on a road of significant restructuring under its new CEO, Larry Culp, Danaher will grow one of its core business areas in life sciences through the big buyout.

GE today announced an agreement to sell the majority of its Boston-based life sciences business to Danaher.

The transaction allows the company to slim down further, and covers instruments and software that support research and development of biopharmaceutical drugs, a business that comprises about 15 per cent of the revenues of GE's health sector. The healthcare unit brought in $19 billion in revenue in 2018 and $3.4 billion in profit, according to CNBC. The deal is expected to close in the fourth quarter of 2019 and will reportedly pause plans to spinoff GE Healthcare as its own company through an IPO. "A more focused portfolio is the right structure for G.E., and we have many options for maximizing shareholder value along the way".

GE confidentially filed an IPO in December to make its healthcare unit a standalone enterprise in June 2019. Danaher's stock was up 8.52%. "It's unlikely we would do something here in the near to medium term", Culp said. Culp, who took over as CEO on October 1 of previous year, replacing John Flannery, in January said GE's strategy moving forward "is clear: de-leverage our balance sheet and strengthen our businesses, starting with Power".