General Electric’s shares surged more than 5% on Monday after the Company announced the sale of its biopharma business to Danahar (DHR) for a $21.4 billion all-cash deal. The company also announced its plans to use the cash received from the deal to defray its debts.
According to the terms of the deal, Danaher will pay $21 billion in cash to GE but at the same time it will also assume certain GE pension liabilities.
Expected to be complete by the fourth quarter, the deal is likely to see GE Life Sciences unit is expected to join Danaher’s Life Science as a stand-alone business. GE biopharma unit is expected to generate about $3.2 billion in revenue this year.
After the announcement, GE’s share traded as high as $11.75 in early trading before shedding some gains to close up 6.4% at $10.82 a share. Danaher’s stock also jumped 8.5% to close at $123.15 a share.
GE has already seen yields on its debt bonds fall to low levels along with a decline in risk premium demanded by investors in exchange for holding GE paper. But following the announcement, GE saw one of its most active bonds – the $11.5 billion of 4.418% notes due in November 2035 – jump 2.6 points in price to regain the $0.90 on the dollar level for the first time since October.