The business, which makes equipment for researching, developing and manufacturing biopharmaceuticals and had revenues of around $3 billion previous year, will now operate as a separate division within Danaher's $6.5 billion life sciences division after the closure of the deal. The company also points out that the net price of the deal will be $20 billion after taking into account for tax benefits.
GE jumped 18% to US$11.95 ahead of regular trading in NY yesterday.
Culp told CNBC that while an IPO for the healthcare business was plan A, "this is clearly a superior path", as it gives the company a quick route to paying down debt. And in defense of Culp, who has been touted by many analysts as a great turnaround CEO for GE, GE shares rose by 6.4% to $10.82. When the deal with Danaher closes, GE Biopharma will become part of that company's own Life Sciences division.
Shares of GE rocketed higher after the announcement.
GE today announced an agreement to sell the majority of its Boston-based life sciences business to Danaher.
Culp said on Monday the sale to Danaher, where he was instrumental in revitalizing the company as its CEO, was a pivotal milestone in efforts to turn around GE, a 126-year old conglomerate.
It's expected to close sometime in the fourth quarter, with any IPO for the remaining health assets not likely to occur until afterwards. GE will receive cash proceeds of about $21 billion while also transferring certain pension liabilities to Danaher.
FCA investing $4.5B into Detroit area
The reborn Mack facility would be the first new assembly plant to be built in the city of Detroit in almost three decades. In fact, all the planned expansions include provisions for increased production of hybrid and electric components.
Analysts from Evercore ISI called the GE deal a "multi-year home run" for Danaher, characterizing the deal as one shareholders "have been clamoring for".
The verdict is not universal that Danaher stole the company, but the reports all had something positive to say about the deal.
We think this is a natural fit for Danaher's existing business, and both eliminates a major competitor in this business and creates a wide moat and gap between DHR and other competitors. Last year, it bought Integrated DNA Technologies, a gene-sequencing and editing company, for $2 billion. The remaining parts posted about $17 billion in revenue previous year, the company stated, with operating profit margins in the mid-teens.
The transaction allows the company to slim down further, and covers instruments and software that support research and development of biopharmaceutical drugs, a business that comprises about 15 per cent of the revenues of GE's health sector.
GE's decision to sell GE BioPharma to its CEO's old company may raise eyebrows among investors.
DHR stock was up 7% and GE stock was up 8% as of noon Monday. "It's unlikely we would do something here in the near to medium term", he said. At the end of a year ago, the company's interest-bearing liabilities had ballooned to 110 billion dollars.