GE sells biopharma business to Danaher for $21.4B, reconsiders healthcare IPO

GE sells biopharma business to Danaher for $21.4B, reconsiders healthcare IPO

According to CNBC, GE began to ready paperwork for the IPO of its health care business to complete its spinoff, but these plans will likely be shelved after it agreed a $21.4bn (€18.85bn) with Danaher for the BioPharma unit within GE Healthcare.

"GE Biopharma is renowned for providing best-in-class bioprocessing technologies and solutions", said Danaher CEO Tom Joyce after Monday's agreement. The GE biopharma unit is expected to generate about $3.2 billion in revenue this year.

The announcement also further eased concerns about GE's solvency that had grown markedly previous year, reflected in a surge in the price for GE credit default swaps, a form of insurance against default, during the fourth quarter.

Shares of GE opened up more than 13 percent on the New York Stock Exchange following the news Monday.

"Today's transaction is a pivotal milestone", Culp said in a statement published by CNN Business.

Danaher (NYSE:DHR) sees financing its $21.4B purchase of GE's biopharma business with about $3B of proceeds from an equity offering and the rest from available cash on hand and proceeds from issuing debt and/or new credit facilities. The sale could give GE a big advantage in addressing its liquidity problems. So by selling off the unit for $21 billion in capital that will be coming into GE, it also added nearly $7 billion in market to end with a $94 billion market value. GE Biopharma will operate as a stand-alone company within Danaher's Life Sciences segment.

The company had said in July a year ago that it expected to spin off its dental unit into a publicly traded company to be tax-free to shareholders.

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In November, GE announced it would expedite efforts to sell a $4 billion stake in the oil-field-services provider Baker Hughes.

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

Another analyst, Dan Brennan of the investment bank UBS, said it "looks like a great fit" for Danaher, particularly given how it fits with a previous acquisition of Pall, he wrote in a February 25 note to investors. "To do this, we are improving execution, customer focus, and how we set priorities across GE".

Shares of Danaher closed up 8.5% at $123.15 and the company hit a 52-week high of $124.10. Culp has been reshaping the portfolio, while looking to cut expenses and repay debt.

GE is up 2% to $10.62 in recent trading. Culp, the first outsider to lead the company in its history, has made restructuring a priority in turning the company around.

Danaher will pay the majority of the cost - $21 billion - in cash while assuming some GE pension liabilities.

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