General Electric shares gain the most in 3 1/2 weeks on Monday, company’s BioPharma division to be sold to Danaher for $21.4 billion

February 26, 2019 8:17 am

General Electric Company (GE) said on Monday that it had agreed to sell its BioPharma business to Danaher Corporation for a total amount of $21.4 billion, including $21 billion in cash and the assumption of GE’s certain pension liabilities.

General Electric shares closed higher for a second consecutive trading session in New York on Monday. It has also been the sharpest daily surge since January 31st. The stock went up 6.39% ($0.65) to $10.82, after touching an intraday high at $11.75, or a price level not seen since October 25th ($12.28).

Shares of General Electric Company have risen 42.93% so far in 2019 compared with an 11.54% gain for the benchmark index, S&P 500 (SPX).

In 2018, General Electric’s stock plummeted 56.62%, thus, it underperformed the S&P 500, which registered a 6.24% loss.

The BioPharma unit, which the industrial conglomerate intends to divest, represents part of GE Life Sciences, while it generated almost $3 billion in revenue last year. GE’s BioPharma business encompasses process chromatography hardware and consumables, single use technologies, cell culture media, development instrumentation and consumables, and service.

Currently being part of GE Life Sciences, Pharmaceutical Diagnostics, is expected to remain within the GE Healthcare portfolio, which generated nearly $17 billion in revenue in 2018.

The deal is expected to be finalized during this year’s fourth quarter, subject to regulatory approvals.

“Today’s transaction is a pivotal milestone. It demonstrates that we are executing on our strategy by taking thoughtful and deliberate action to reduce leverage and strengthen our balance sheet,” H. Lawrence Culp, Jr., GE’s Chairman and Chief Executive Officer, said in a statement.

“We are retaining full flexibility for growth and strategic optionality with one of the world’s leading healthcare companies, and we are pleased that our BioPharma colleagues will join a strong, established team at Danaher. A more focused portfolio is the right structure for GE, and we have many options for maximizing shareholder value along the way,” he added.

According to CNN Money, the 13 analysts, offering 12-month forecasts regarding General Electric’s stock price, have a median target of $12.00, with a high estimate of $21.00 and a low estimate of $6.00. The median estimate represents a 10.91% upside compared to the closing price of $10.82 on February 25th.

The same media also reported that 9 out of 21 surveyed investment analysts had rated General Electric’s stock as “Buy”, while other 9 – as “Hold”. On the other hand, 1 analyst had recommended selling the stock.

Weekly Pivot Levels

By using the traditional method of calculation, the weekly levels of importance for General Electric Company (GE) are presented as follows:

Central Pivot Point – $10.11
R1 – $10.26
R2 – $10.36
R3 – $10.51
R4 – $10.67

S1 – $10.01
S2 – $9.86
S3 – $9.76
S4 – $9.67

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