Danaher Buys GE’s BioPharma Unit

This morning, Danaher (DHR) announced that it’s buying General Electric’s biopharmaceutical business for $21.4 billion. The deal is all cash. If you recall, GE’s new CEO is Larry Culp who used to be CEO of Danaher (and a person who helped make a lot of money for us.)

Nor is this the first GE garage sale that we’ve been a part of. GE sold its transportation unit to Wabtec, a former Buy List stock. That deal completed today. In April, Danaher approached GE for a deal, but GE wasn’t interested. This time, they were. Initially, GE had wanted to sell off their entire healthcare business of which the biopharma business is just a part.

Danaher’s President and CEO, Thomas P. Joyce, Jr., said, “GE Biopharma is renowned for providing best-in-class bioprocessing technologies and solutions. This acquisition will bring a talented and passionate team as well as a highly innovative, industry-leading product suite to our Life Sciences portfolio, providing an excellent complement to our current biologics workflow solutions.”

Joyce continued, “We expect GE Biopharma to advance our growth and innovation strategy in an important and highly attractive life science market. We see meaningful opportunities to harness the power of the Danaher Business System to further provide GE Biopharma’s customers with end-to-end bioprocessing solutions that help enable breakthrough development and production capabilities. We look forward to welcoming this talented team to Danaher.”

Danaher said the deal should be completed by the fourth quarter. Breaking down the numbers, Danaher said they’re paying 17 times expected earnings. To fund the deal, Danaher will issue a mix of debt and equity. Danaher still has plans to spinoff its dental business later this year. The proceeds from that will help fund the GE deal. Danaher also spunoff Fortive a few years ago.

GE has been in a great deal of trouble and the company needs to raise cash. As a result, it has sold off assets in an attempt to save the business.

Update: Danaher rose 8.5% today.

Posted by on February 25th, 2019 at 10:30 am


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