GE sells Biopharma for 21 billion dollars
April 12, 2019
General Electric Co. sells Biopharma to Danaher Corp. for $21.4 billion, its first major asset sale under new Chief Executive Officer, Larry Culp. The announced sale was a short-term windfall for the company. Its shares increased nearly 17 percent Monday but it may also be a long-term investment, according to industry observers in Connecticut, where bioscience industries have thrived in recent years.
This deal will help General Electric help pay off their $100 billion dollar debt that they have acquired over multiple years.
The BioPharma unit makes software that supports the research and development of pharmaceuticals. It brought in $3 billion in revenue last year.
Last year HE rejected an approach by Danaher for that business a year ago. But that mindset changed after Culp was appointed CEO and GE boards became more open to a deal.
As a result, GE will receive some $20 billion in net proceeds which it will use to trim its debt pile which is at a total of $121 billion at the end of December.
“Today’s transaction is a pivotal milestone,” Culp said in a statement.
“It demonstrates that we are executing on our strategy by taking thoughtful and deliberate action to reduce leverage and strengthen our balance sheet,” Culp said in a statement.
“It takes time” for pharmacy-based products seven to 15 years, Wurzer said. Culp was hired to turn around GE last fall, becoming the conglomerates first ever outsider CEO Culp secured a handsome pay that would give him more than $310 million in total compensation if he can lift GE shares to about $31 by the end of September 2022. Larry Culp “has earned his job before him, John Flannery or Jeff Immelt would have probably been able to pull off this transaction with Danaher,” William Blair and Co analyst, Nicholas Heymann, said.
After this sale, both companies shares skyrocketed. Danaher, the company that bought biopharma for $21 billion dollars, shares spiked, General Electrics shares spiked 34.4% over the past three months and Danaher shares climbed 10.8% according to The Street.
