GE's new CEO played a key role in unlocking a 'win-win' deal with Danaher

  • General Electric said on Monday it would sell its biopharma business to Danaher in a $US21.4 billion transaction – Danaher’s largest-ever deal.
  • Danaher had approached General Electric last year about buying the biopharma unit, but was rebuffed.
  • But this time, Danaher was successful with its pursuit, as its prior CEO Larry Culp had gone over to run General Electric.
  • The conglomerate is undergoing a broad reorganization, first announced last June under former CEO John Flannery; its shares have plummeted 67% since mid-2016.
  • But the stock is up 60% from recent lows, and popped 6% on news of the Danaher deal.

Investors in industrial stalwart General Electric and science and technology company Danaher cheered on Monday when the two firms announced a monster deal.

GE would sell its biopharma business to Danaher for $US21.4 billion, the largest-ever deal for Danaher.

In every large M&A deal, the two respective company CEOs play critical roles in shaping the transaction. But in this deal, Larry Culp, GE’s new CEO and the former chief executive at Danaher, had an outsized part to play.

Culp, who was named as chairman and CEO of GE last October at a critical moment of transition for the beleaguered 127-year-old industrial giant, served as chief executive of Danaher from 2000 to 2014.

It was Culp at the helm, along with a shuffle at GE’s board of directors last year, that helped get the deal across the finish line after Danaher had previously been rebuffed by GE in its pursuit of the biopharma business, according to a person familiar with the deal.

Danaher initially approached GE last April to express interest in buying the unit, but the industrials conglomerate wouldn’t engage, according to a Wall Street Journal report at the time.

In late October, once Culp was newly appointed to his role at GE, Danaher again sought to start acquisition talks with the company. A few months later in January, the two companies began seriously discussing a potential deal for the biopharma business, which came together in just a few weeks.

On Monday, UBS said the newly executed deal was a “win-win” for both companies.

Culp’s tenure at GE comes at a delicate moment for the industrial company, undergoing a reorganization announced last year under former CEO John Flannery. The stock has been in a virtual free-fall for years, now trading nearly 70% below its recent high in 2016.

GE lost its place as a Dow Jones industrial average component last summer – a long-speculated move emblematic of how far it had fallen.

Since the stock’s December low, however, it’s surged 60%.

Shares of GE were trading higher on Tuesday, at $US10.59 per share. Danaher shares were trading modestly lower, at $US122.50 per share.

Read more:

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.