The share price of beleaguered General Electric (GE) surged 6.4% on Monday (25 February) after Danaher agreed to buy its biopharmaceutical business for $21.4bn in cash, which should help lessen its $100bn debt. The deal will give GE a much-needed cash injection to pay its insurance liabilities as well. The GE Life Sciences unit (forecast to generate revenue of c. $3.2bn this year) will join Danaher’s Life Science as a stand-alone business. Danaher expects to complete the deal by 4Q19.
“We are focused on completing the carve out [of the biopharma business] – which is 15% of the $20bn healthcare segment – and focus on managing the remaining core business,” GE Chairman and CEO Larry Culp told CNBC. The deal also includes some of GE’s pension liabilities which also came as welcome news to investors. GE has hundreds of thousands of employees covered by pension plans and, at the end of 2018, pensions represented $21bn of GE’s $55bn in industrial debt. GE also closed the merger of its transportation business with Wabtec, receiving $2.9bn in cash for the merger.
GE also announced plans to provide shareholders with its FY19 forecast on 14 March. GE shares closed at $10.82/share on Monday. WoW the share price is up c. 7%