GE Finally Lands $20 Billion Payday After Closing Biopharma Sale

(Bloomberg) -- General Electric Co. finalized the $21.4 billion sale of its biopharma business, bringing in much-needed cash and bolstering Chief Executive Officer Larry Culp’s efforts to chip away at a debilitating debt load.

The sale to Danaher Corp. gives GE net proceeds of $20 billion, after accounting for taxes, fees and factored receivable balances, according to a statement Tuesday announcing the close of the transaction. The companies won approval from the Federal Trade Commission earlier this month for the deal, which was announced in early 2019.

The smooth completion will give investors a measure of relief as the coronavirus outbreak upends global economies and forces a growing number of companies to shore up their finances. Anticipated proceeds from the biopharma deal have been central to Culp’s plans to reduce GE’s debt and help it recover from a deep slump in recent years.

The sale “represents a critical milestone on our multiyear transformation, fortifying our considerable sources to de-risk our balance sheet and continue to solidify our financial position,” Culp said in the statement.

The shares fell 1.5% to $7.82 after the close of regular trading in New York. GE has declined 29% this year as the coronavirus pandemic sent stocks tumbling across the globe. A Standard & Poor’s index of U.S. industrial companies slid 27%.

Cash from the biopharma deal will enable GE to “materially deleverage its balance sheet,” Karen Ubelhart, an analyst with Bloomberg Intelligence, said in a March 19 report. GE has a goal to reduce its ratio of net debt to earnings before interest, taxes, depreciation and amortization to less than 2.5 times. That ratio was 4.2 at the end of last year and 4.8 a year earlier.

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