GE Sells Biopharma Unit To Inject Cash And Meet Its Debts
General Electric has made plans to sell its Biopharma asset to Danaher on Monday.
The deal was made at $21.4 billion. The company has made the asset sale to deleverage its balance sheet and reduce its portfolio.
Investors, who were worried about the $100 billion debt that GE was burdened with, feel that the asset sale would improve the liquidity in the firm. The deal has been a good one and shares were seen to increase after the deal was made.
GE shares rose by 2.5 percent on Tuesday.
The shares of GE which touched a high of $15.29 in May 2018, however, started to slide to almost a third of the value. The sale of its Biopharma business was seen to be positive for the company, as shares rose by almost 15 percent on Tuesday.
Many have commended the company on the wise move.
RBC Capital Markets says that the Biopharma deal will be an important de-leveraging milestone, and the cash proceeds will help to improve GE’s liquidity.
However, Deutsche Bank has not been very positive about healthcare revenue. Nicole DeBlase from Deutsche Bank says that the Biopharma business was the crown jewel among the healthcare portfolio, and now GE is left with the less attractive parts in the healthcare business.
Analyst Nicholas Heyman from William Blair & Co says that the sale is good, as Danaher is paying two times our expectations, which will help the company to meet liquidity concerns.
The industrial giant had a poor 2018 but has been able to start the current year with a positive note. The company had to shed its health care ambitions and go back to its industrial base.
CEO Larry Culp, who started to head the company in October 2018, has monitored the asset sale. The CEO had made the announcement about the healthcare unit sale, early in January.