GE GE Aerospace

By Dana Mattioli, Dana Cimilluca and Thomas Gryta 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (April 26, 2018).

Danaher Corp. recently expressed interest in a deal for General Electric Co.'s life-sciences business, but GE didn't engage and isn't pursuing a deal, according to people familiar with the matter.

The structure and value of the proposed transaction couldn't be determined, and the people said there are no active discussions. GE's life-sciences business, which had about $4.6 billion in revenue last year, sells lab supplies such as blood-collection kits as well as equipment for biotechnology drug production and research.

The unit could be worth more than $20 billion, according to analyst estimates and based on how much life-sciences businesses have fetched in recent deals.

The abortive approach is one of a number GE has received for various businesses recently as competitors seek to gain advantage from its weakness, and shows how the once-mighty company's fortunes have fallen.

GE has been restructuring its business and conducting a strategic review, as Chief Executive John Flannery seeks to narrow its focus to improve profits and revive shares whose value has fallen by more than half in the past year. In that period, GE changed leaders, slashed its dividend and lowered its profit targets.

GE is attracting interest in several divisions, finance chief Jamie Miller said last week. She declined to comment on specifics but said GE is open to all sort of structures including spinoffs, IPOs and straight cash deals.

"The structure can depend on the counter party," she said in a recent interview. "We are looking to do deals that are smart for the company."

GE is seeking to avoid firesale prices and wants its investors to be able to benefit from gains at the businesses, so it's exploring hybrid deals instead of outright sales, The Wall Street Journal has reported.

Its reaction to Danaher's approach is a reflection of the industrial giant's reluctance to part with its most valuable pieces.

The life-sciences operation is one of two main business lines in GE's sprawling healthcare division, one of the company's biggest with about 50,000 employees and $19.1 billion in revenue last year. The larger piece sells MRI and X-ray machines and other hospital equipment. The life-sciences segment accounts for about 24% of the division's sales.

Some analysts have highlighted the higher profitability and growth at the life-sciences business, as compared with the equipment side, in identifying it as a possible target for divestiture. Rivals include Danaher and Thermo Fisher Scientific Inc.

Danaher, a conglomerate that has slimmed down in recent years, is a serial dealmaker with a market value of some $70 billion. In 2015, it paid $13.6 billion for Pall Corp., another life-sciences company; a year later, it spun off its industrials businesses into a separate public company called Fortive Corp.

Danaher now focuses on life-sciences and businesses such as high-tech filtration and blood diagnostics as well as developing microscopes and scientific instruments. It had $18.3 billion in revenue last year.

On an earnings conference call last week, Danaher executives said the company was on the hunt for potential acquisitions. In March, it reached a $2 billion deal to buy IDT, a privately held maker of products used in genomics research.

"We're excited about some of the things out there. We continue to be very active," Daniel Comas, the company's finance chief told analysts on April 19. "We're right back at it, looking at sizable opportunities."

Write to Dana Mattioli at dana.mattioli@wsj.com, Dana Cimilluca at dana.cimilluca@wsj.com and Thomas Gryta at thomas.gryta@wsj.com

(END) Dow Jones Newswires

April 26, 2018 02:47 ET (06:47 GMT)

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