GE Stock Price Jumps 6.4% As Danaher Acquires BioPharma Business For $21B

Downtrodden General Electric took a welcome respite from its many misfortunes by announcing the sale of its entire healthcare business to Danaher Corporation, an American conglomerate that makes and markets industrial, healthcare and consumer products.

GE shares jumped on news of the $21.4 billion all-cash deal by as much as 15 percent in early Monday trading, up from Friday’s close of $10.17 a share. It closed at $10.82 a share, a 6.4 percent jump. Danaher’s stock also rose, and improved 8.5 percent from its previous close of $113.48 a share.

GE will sell its GE Healthcare Life Sciences unit to Danaher. The deal will see Danaher pay $21 billion in cash and take on certain GE pension liabilities.

GE Healthcare Life Sciences will join the Danaher’s Life Sciences division as a stand-alone business. GE Healthcare Life Sciences is expected to generate some $3.2 billion in revenue this year.

“We are focused on completing the carve out (of the biopharma business) -- which is 15 percent of the $20 billion healthcare segment -- and focused on managing the remaining core business,” said GE Chairman and CEO Larry Culp.

Culp was the former CEO of Danaher from 2001 to 2014. He then joined GE as a director in February 2018. Culp was made GE Chairman and CEO in October 2018.

Culp revealed that GE decided to break up the Life Sciences unit since the biopharma business is distinct from the pharmaceutical diagnostics business.

“IPO of healthcare was Plan A, but we got lots of inbound calls about this business and this is clearly a superior path,” according to Culp.

Some analysts noted the deal is “a rich valuation that goes a long way towards GE’s debt reduction.”

“Sale of biopharma a positive,” said Credit Suisse in a note to investors. “Under CEO Culp, GE has been accelerating its strategy to strengthen and deleverage the balance sheet.”

Analysts said Danaher approached GE in April 2018 with an intent to acquire GE Healthcare Life Sciences, but GE refused to bite.

The inclusion of some GE pension liabilities in the deal was welcomed by investors. In 2018, pensions represented $21 billion of GE’s $55 billion in industrial debt.

“We have too much debt,” said Culp.