Danaher said today it has agreed to buy the biopharma business of GE Life Sciences for approximately $21.4 billion cash, in a deal designed to enhance the buyer’s bioprocessing offerings and pay down the seller’s debt.
Danaher said the net purchase price for GE Biopharma is projected to be approximately $20 billion in light of anticipated tax benefits from the structure of the transaction.
GE Biopharma is a provider of instruments, consumables, and software designed to support the research, discovery, process development, and manufacturing workflows of biopharma drugs. The business includes process chromatography hardware and consumables, cell culture media, single-use technologies, development instrumentation and consumables, and service.
Following completion of the acquisition, GE Biopharma will operate as a standalone company within Danaher’s Life Sciences segment. The $6.5 billion segment includes the Pall, Beckman Coulter Life Sciences, SCIEX, Leica Microsystems, Molecular Devices, Phenomenex, and IDT businesses of Danaher.
“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,” Danaher president and CEO, Thomas P. Joyce, Jr., said in a statement.
“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.”
Joyce added that Danaher expects GE Biopharma to advance its growth and innovation strategy. Danaher has projected that GE Biopharma will generate annual revenue of approximately $3.2 billion in 2019, with approximately 75% of these revenues considered recurring.
Danaher finished last year with net earnings of $2.7 billion, a 7% year-over-year increase, on revenues that increased 8.5% to $19.9 billion.
In announcing the deal today, Danaher said it expected to finance the all-cash transaction through approximately $3 billion of proceeds from an equity offering, which may include an offering of mandatory convertible preferred shares, as well as through available cash on hand and proceeds from the issuance of debt and/or new credit facilities.
Danaher projected that the acquisition will reduce its GAAP diluted net earnings per share by approximately $1.15 to $1.20 but will add to its non-GAAP, adjusted diluted net earnings per share by approximately $0.45 to $0.50 in the first full year post acquisition.
The non-GAAP, adjusted diluted net earnings per share amounts exclude anticipated non-cash amortization, purchase accounting charges and transaction expenses attributable to the acquisition, as well as stand-up costs related to carving out the business.
Danaher’s 2018 results came to $3.74 per diluted share, while non-GAAP adjusted diluted net earnings per share for 2018 were $4.52 per share, a 12% increase over the 2017 amount.
GE CEO Larry Culp—who served as Danaher’s CEO from 2001 to 2014—told The Wall Street Journal that by shedding one of its fastest-growing businesses, GE aimed to reduce debt quicker than earlier plans to spin off all of GE’s healthcare operations through an initial public offering. “This offer gets us a little closer to a place where we aren’t spending so much of our agenda tending to the balance sheet.”
The IPO plans are being re-evaluated, Culp added, while GE focuses on completing its sell-off. Danaher said the transaction was expected to be completed in the fourth quarter of calendar year 2019, and is subject to customary conditions, including receipt of applicable regulatory approvals.
