GE has signed a definitive agreement to sell its BioPharma business to Danaher, the global science and technology corporation. Expected to finalise in Q4 this year, the deal will see GE get US$21 billion in cash. The agreed transaction worth $21.4bn is not subject to a financing condition or a shareholder vote.
"Today’s transaction is a pivotal milestone," said Lawrence Culp, Jr., GE Chairman and CEO, adding that it demonstrates that "we are executing on our strategy by taking thoughtful and deliberate action to reduce leverage and strengthen our balance sheet".
For Culp, the deal is a move to retain full flexibility for growth and strategic optionality with one of the world’s leading healthcare companies. "We are pleased that our BioPharma colleagues will join a strong, established team at Danaher," Culp enthused.
Thomas P. Joyce, Jr., Danaher President and CEO, concurred. "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," he said.
Life Sciences business
The BioPharma business being divested is part of GE Life Sciences. The unit comprises process chromatography hardware and consumables, cell culture media, single-use technologies, development instrumentation and consumables, and service. It also includes GE's KuBio, the factory-in-a-box concept for biomanufacturing. In 2018, the BioPharma business generated revenues of approximately $3bn.
Culp explained: "A more focused portfolio is the right structure for GE, and we have many options for maximising shareholder value along the way.”
Pharmaceutical Diagnostics, currently part of GE Life Sciences, will remain within the GE Healthcare portfolio. This 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.
Kieran Murphy, GE Healthcare President
GE Healthcare has a global installed base of more than four million imaging, mobile diagnostic and monitoring units. In 2018 this business, excluding BioPharma, generated approximately $17bn of revenue with mid-teens operating profit margins.
"The BioPharma business has been a strong contributor to our success, and I am confident this agreement represents a great opportunity for our valued colleagues to flourish under the ownership of Danaher," commented Kieran Murphy, GE Healthcare President and CEO.
"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 concluded.
Danaher said the BioPharma business will be established as a standalone operating company within its $6.5bn Life Sciences segment, joining the company's Pall, Beckman Coulter Life Sciences, SCIEX, Leica Microsystems, Molecular Devices, Phenomenex and IDT businesses.
Joyce commented: "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."
PJT Partners LP, J.P. Morgan Securities LLC, Citigroup Global Markets Inc. and Goldman Sachs acted as financial advisors and Paul, Weiss, Rifkind, Wharton & Garrison LLP acted as legal advisor to GE on the transaction.