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Danaher Closes Buyout of General Electric's BioPharma Business

Zacks Equity Research

Danaher Corporation DHR yesterday announced that it completed the acquisition of General Electric Company’s GE BioPharma business. Notably, the buyout deal was revealed in February 2019 by the parties involved.

The BioPharma business originally belonged to General Electric’s GE Life Sciences business under the ambit of the Healthcare segment. The BioPharma business comprises single-use technologies, process chromatography hardware and related consumables, development instrumentation and related consumables, and cell culture media and service.

Inside the Headlines

For the completion of the transaction, Danaher secured approvals from various regulatory authorities, including the European Commission as well as the antitrust authorities of Korea, Brazil, Russia, China, Israel and Japan. Also, the U.S. Federal Trade Commission gave a green signal to the buyout on Mar 19.

Danaher used cash on hand, proceeds from shares and preferred stock issuances, and funds raised through debts and credit facilities to pay $21 billion for the buyout. The company also assumed certain pension liabilities of General Electric. The total transaction value for the buyout was $21.4 billion.

The acquired BioPharma business will be included in Danaher’s Life Sciences segment. It will be called Cytiva and work as an operating company (stand-alone).

Danaher anticipates the acquisition to strengthen its biologics workflow solutions. Earnings accretion of 60 cents per share is anticipated in 2020 (disclosed in January 2020) from the buyout. Previously, the company had expected 45-50 cents per share earnings accretion for the first year of the deal completion.

Danaher’s Acquisitions

We believe that the above-mentioned transaction is consistent with the company’s policy of acquiring businesses to gain access to new customers, regions and product lines. In 2019, it used $331.3 million for making acquisitions.

Danaher acquired Labcyte Corporation in January 2019. The buyout of Labcyte has been fortifying Danaher’s automation capabilities.

Zacks Rank, Price Performance and Estimate Trend

With a market capitalization of $98.1 billion, Danaher currently carries a Zacks Rank #3 (Hold). The company is poised to benefit from product innovation, Danaher Business System, shareholder-friendly policies and inorganic initiatives. However, forex woes, high costs and huge debts remain concerning.

The company’s share price has decreased 10.7% in the past three months compared with the 26.5% fall recorded by the industry.




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In the past 60 days, the Zacks Consensus Estimate for its earnings has been lowered by 1.3% to $5.38 for 2020 and 0.8% to $6.17 for 2021. Notably, there were three downward revisions for both years in the past 60 days.

Danaher Corporation Price and Consensus

 

Danaher Corporation Price and Consensus
Danaher Corporation Price and Consensus

Danaher Corporation price-consensus-chart | Danaher Corporation Quote

Stocks to Consider

Two better-ranked stocks in the industry are Griffon Corporation GFF and Hitachi Ltd. HTHIY. While Hitachi sports a Zacks Rank #1 (Strong Buy), Griffon carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

In the past 60 days, earnings estimates for Hitachi have improved for the current year, while have been unchanged for Griffon.

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General Electric Company (GE) : Free Stock Analysis Report
 
Danaher Corporation (DHR) : Free Stock Analysis Report
 
Hitachi Ltd. (HTHIY) : Free Stock Analysis Report
 
Griffon Corporation (GFF) : Free Stock Analysis Report
 
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Zacks Investment Research