As a part of its restructuring plan and to further focus completely on its core business some of the peripheral businesses are being sold off by the once sprawling conglomerate General Electric. The company announced the selling off its biopharma business to Danaher Corp. for $21.4 billion.
Last year, revenue of $3 billion was generated by this biopharma unit of the GE that was linked to the Life Sciences division of GE. A price tag which would be closer to $20 billion would the value of the deal after accounting for tax benefits, Danaher said. it is expected that by the fourth quarter of the current year, there would be closure of this primarily cash based deal.
The biopharma segment of GE would be kept as a separate company within the ambit of the $6.5 billion Life Sciences division of Danaher, said the company which is a Washington, D.C, based a medical technology firm.
Ever since being hit by the global financial crisis about a decade ago, there has been significant shrinkage in the number of companies in the conglomerate of GE. The company has been constantly trying to sell off its non-core businesses. The Healthcare Equipment Finance of GE was sold off by the company last fall to TIAA Bank. At the around the same time, GE also agreed to divest its Current, which is powered by GE business and is a part of the lighting business of the company, to American Industrial Partners.
Shortly after removing its CEO John Flannery, who had been at the job for only about year, the company in October last year announced cutting of its quarterly dividend and said that the power business of the conglomerate would be restructured soon. There was even greater need for GE to simplify its business structure, said the new CEO of the company, Larry Culp, soon after he was hired.
The global headquarters of the company in Boston would be downsized, the company said this month and had added that would also give back the $87 million that it had been given as incentives to Massachusetts for moving the headquarters from Connecticut three years ago.
The company also scuttled its plans for construction of a sprawling 12-story office tower on the waterfront of the city which was to become the most important part of the new global headquarters of the company. The company has also announced the sell off of the piece of land where the building was being planned in addition to more plots of land which houses state owned buildings which were being refurbished for the company.
Last quarter, the performance of GE was better than expected despite the weakness in its power division because of strong performance in some of the other businesses of the company.
There was an increase of 17 per cent in the shares of the company after the sell off news. Since the start of the current year, the company has seen its shares rise by about 34 per cent but they are almost 30 per cent lower compared to the price a year ago.
(Adapted from WSJ.com)