Shares of General Electric jumped as much as 13 percent in trading this morning after Danaher announced it was acquiring the conglomerate’s biopharma business, GE Biopharma, for $21.4 billion.
GE Biopharma includes a wide-range of dealings, including the development and sale of medical instruments, consumables, and software that support the research, discovery, process development and manufacturing workflows of biopharmaceutical drugs. Also, the business includes development and manufacturing workflows of biopharmaceutical drugs. The business is comprised of process chromatography hardware and consumables, cell culture media, single-use technologies, development instrumentation and consumables, and service. Danaher said the GE Biopharma business is expected to generate annual revenue of approximately $3.2 billion in 2019. Approximately 75 percent of these revenues considered recurring, the company said.
For General Electric, the move to sell off its biopharma business will strengthen the company’s balance sheet.
Pharmaceutical Diagnostics, currently part of GE Life Sciences, will remain within the GE Healthcare portfolio, GE said this morning. That business supplies contrast media and molecular imaging consumables for radiology customers around the world and is highly complementary to GE Healthcare’s medical imaging business, the company said.
Kieran Murphy, president and chief executive officer of GE Healthcare, said the biopharma business unit has been a strong contributor to the company’s success. Murphy said the agreement represents a great opportunity for that business to continue to flourish under Danaher.
“GE Healthcare has unsurpassed scale and scope and we will continue to focus on our investments so that we deliver better outcomes and more capacity to a world striving for Precision Health,” Murphy said.
Danaher will pay cash for GE Biopharma. The company said it will finance the deal with approximately $3 billion of proceeds from an equity offering and the remainder will be from available cash on hand. Danaher said GE Biopharma will be established as a stand-alone operating company within Danaher’s $6.5 billion Life Sciences segment. It will join the company’s Pall, Beckman Coulter Life Sciences, SCIEX, Leica Microsystems, Molecular Devices, Phenomenex and IDT businesses, Danaher said.
Thomas P. Joyce Jr., president and CEO of Danaher, said GE Biopharma is known 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 said in a statement.
Joyce said Danaher expected GE Biopharma will advance the company’s growth and innovation strategy. He said Danaher sees 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.”
The transaction is expected to be completed in the fourth quarter of 2019, Danaher said.