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Danaher to Buy GE Biopharma for $21.4B

NEW YORK (GenomeWeb) – Danaher announced today a definitive agreement to purchase General Electric's Biopharma business for a cash purchase price of $21.4 billion.

Factoring tax benefits from the structure of the deal, the net purchase price is about $20 billion, Danaher said.

GE Biopharma provides instruments, consumables, and software for the research, discovery, process development, and manufacturing workflows of biopharmaceutical drugs. The business comprises process chromatography hardware and consumables, cell culture media, single-use technologies, development instrumentation and consumables, and service. The business is expected to generate $3.2 billion in revenues in 2019 with about 75 percent of that considered recurring revenues.

The business will be a standalone company operating within Danaher's $6.5 billion Life Sciences segment.

On a conference call, Danaher President and CEO Thomas Joyce said that the deal is expected to accelerate and enhance the company's Life Sciences platform strategy, "complementing our efforts to materially reduce biologic drug production costs while compressing the time-to-market for lifesaving drugs."

Upon the closing of the deal, Danaher's exposure to the biologics end market, which will represent approximately half of the total Life Sciences revenues of about $10 billion, will increase significantly, Joyce added. The business is anticipated to grow annually at between 6 to 7 percent on a core revenue basis. Within bioprocessing, upstream revenues are about $1.1 billion, while downstream revenues are about $1.7 billion, he said.

He also noted the complementary nature of GE Biopharma with Danaher business Pall. "Process chromatography is an indispensable step in manufacturing biologics and GE Biopharma's position in this downstream process is highly complementary to where we participate today with filtration at Pall," Joyce said. "This combination will help increase our visibility to monocolonal antibody, vaccine, and gene therapy projects in development, representing a growth acceleration opportunity in the future," Joyce said.

Danaher is financing the deal with $3 billion from an equity offering, cash on hand, and proceeds from an issuance of debt and/or new credit facilities, it said. GAAP EPS is expected to be reduced by about $1.15 to $1.20 in the first full year after the acquisition, which is expected to close in the fourth quarter of 2019. On a non-GAAP basis, the acquisition is anticipated to be accretive by about $.45 to $.50 per share.

The deal also marks a renewed M&A initiative by Danaher, which historically has been an active acquirer, but which in recent years has been more muted. Last year, it made four acquisitions for approximately $2.2 billion, including the acquisition of Integrated DNA Technologies for about $2 billion, according to the company's Form 10-K filed with the US Securities and Exchange Commission.

In a research note, UBS analyst Dan Brennan called the deal for GE Biopharma "highly strategic," and said that GE is a leader in downstream chromatography. "With the combined GE and Pall offerings, we see room for revenue synergies (in addition to announced cost synergies)," he said.

Evercore ISI analyst Ross Muken compared the pending deal to Thermo Fisher Scientific's acquisition of Life Technologies in 2014: "This is likely to be a multiyear home run," he said in a research note. "They acquire into tremendous assets, uniquely leveraged to biopharma manufacturing, with a market-leading footprint notably in downstream. "

In morning trading on the New York Stock Exchange, Danaher's shares were up more than 7 percent at $121.82. 

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