GE sells biopharma business to Danaher for $21.4 billion

John Minchillo  Associated Press  File/2018

24/7 Wall St. already covered the news of the merger and the terms. GE received $2.9 billion in cash for the merger. Danaher's stock rallied 7%.

The valuation multiples "look reasonable for a market-leading, high-end life sciences business like GE Biopharma", Dray said.

GE said the pharmaceutical diagnostics business, also a part of GE Life Sciences, will remain within the GE Healthcare portfolio.

Instead, the company will prioritize completing the Danaher deal while retaining the rest of its healthcare unit.

GE also said that weakness in the GE Power unit meant it would miss its 2018 free cash flow and earnings guidance target, with the company taking a $23 billion goodwill charge to the Power division. Additionally, its finance arm, GE Capital, sold a $1.5 billion healthcare-equipment finance portfolio to the United States lender TIAA Bank.

"GE Biopharma is renowned for providing best-in-class bioprocessing technologies and solutions", said Danaher CEO Tom Joyce.

As for the impact of the deal on patient care, we'll have to wait and see. And given GE's CEO's close familiarity with both companies and presumed warm feelings for his old place of employ, it makes sense that this deal would appeal to both buyer and seller.

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Janney adjusted its financial models to reflect accretion and a debt issue, but it raised its rating to Buy from Neutral and raised its fair value estimate (price target) to $136 from $110. Danaher will now grow organically around 6% instead of 4% and we expect earnings upside as DHR manages the business.

For GE, the biopharma business is a relatively small chunk of its larger healthcare business.

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.

Muken called the price "very favorable" for Danaher. The firm is positive on the deal as it transforms Danaher's life sciences business.

The transaction is expected to be completed in the fourth quarter of calendar year 2019, and is subject to customary conditions, including receipt of applicable regulatory approvals.

CFRA (S&P Global) maintained its Hold rating but still raised its target to $130 from $116 on Danaher. "To do this, we are improving execution, customer focus, and how we set priorities across GE". GE shares were up 6.39% at the market close, after spiking as much as 13% during the day. The company's shares have risen about 34 percent since the beginning of the year, but are still down nearly 30 percent from a year ago.

Looking ahead. Analysts are weighing in on the sale, and the bulls are out in force.

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