Tennessee is host to many business mergers and acquisitions each year. They can range from very small and informal to large and complex. The reasons for mergers and acquisitions are also far-ranging, and usually comprise a mixture of factors that coalesce at a particular time under what may appear to be compelling circumstances. Moreover, even a multi-faceted conglomerate like General Electric can venture into a transaction without knowing for certain whether the impact will be for ill or for good.
In fact, GE is feeling pretty good after engineering the recent sale of its biopharma business to Danaher for $21 billion and change. GE’s reason for selling was reported to be part of the plan of Larry Culp, its new CEO, to reduce some of the company’s sprawling debt load. That use of the proceeds seems to have been well-calculated, as seen by a 10 percent jump in GE stock in the aftermath of the sale.
Danaher’s purchase may carry more risk on its end of the transaction. The success of the deal for Danaher will depend on its ability to meld the company into its family of life sciences operations. In that sense, however, it is likely to be a positive for Danaher due to its experience in that industry. Generally, investors and analysts are approving the transaction.
GE has been in a trim-down mode for the past few years. The CEO has tried to sell off segments of the conglomerate that do not focus on its core of assets. One question that raises some eyebrows in the field of mergers and acquisitions is the fact that CEO Culp came to GE from Danaher, where he served as that company’s CEO. Analysts, however, appear to approve of the transactions and do not ascribe any ulterior motives other than a natural synergy leading to a common-sense deal for both sides. Transactions of this kind in Tennessee often contain some of the same considerations as the foregoing sale.