Danaher has agreed to sell three of its life sciences tools businesses to Sartorius Stedim Biotech for approximately $750 million cash, the companies said today—a deal that according to Danaher was prompted by its planned $21.4 billion acquisition of GE Life Sciences’ Biopharma business.
Sartorius has agreed to acquire Danaher’s label-free biomolecular characterization, chromatography hardware and resins, and microcarriers and particle validation standards businesses. Sartorius said the three Danaher businesses employ around 300 people worldwide combined, and enjoyed a “strong” growth profile and double-digit profit margins.
“The portfolio proposed for acquisition represents an excellent strategic fit with Sartorius,” Sartorius’ CEO Joachim Kreuzburg, PhD, said in a company statement.
The label-free biomolecular characterization business, which operates under the FortéBio name, consists of protein analysis instruments, biosensors, and reagents that are used in drug discovery and would become part of Sartorius’ bioanalytics unit within its Lab Products & Services division. The products are based on patented biolayer interferometry technology and perform real-time analysis of biomolecular interaction, Sartorius said.
“With the Octet platform of FortéBio, we will add a broadly accepted and differentiated technology for advancing and simplifying drug discovery to our lab division’s portfolio,” Kreuzburg added.
According to Sartorius, the FortéBio business employs approximately 200 employees worldwide with production sites in Fremont, CA, and Shanghai, China.
FortéBio accounts for roughly half of the $140 million in combined revenue generated last year by the three Danaher businesses to be acquired. That accounts for just about 2% of the total $6.5 billion in 2018 revenue garnered by Danaher’s Life Sciences business segment, which includes the Pall, Beckman Coulter Life Sciences, SCIEX, Leica Microsystems, Molecular Devices, Phenomenex, and IDT businesses.
Danaher Life Sciences grew by 13% over 2017—outperforming Danaher as a whole, which grew 8.5% year-over-year to $19.893 billion in 2018 revenues. For the first six months of 2019, Danaher Life Sciences revenues grew 8.4%, to about $3.34 billion from $3.081 billion in January–June 2018.
Also being acquired by Sartorius is Danaher’s chromatography hardware and resins business, a deal that the buyer said will enable it to expand the offerings of its Bioprocess Solutions division. The business addresses a key step in downstream bioprocessing and encompasses multi-use and single-use equipment as well as columns and resins. The unit employs approximately 100 people at sites in Europe and the United States.
Broadening downstream bioprocessing
“The chromatography hardware and resins and the microcarrier businesses broaden our strong bioprocessing offering, particularly in the downstream area,” Kreuzburg stated.
Danaher’s microcarriers and particle validation standards—which operates under the name SoloHill—includes primarily a microcarrier technology and particle validation standards used in cell culture and other bioprocesses. SoloHill is located in Ann Arbor, MI, and employs approximately 10 employees.
Sartorius said the SoloHill and chromatography businesses together accounted for approximately half the revenue of the three Danaher units, about $70 million in 2018—and will be overseen by Sartorius’ major shareholder, Sartorius Stedim Biotech (SSB), since the businesses complement SSB’s position in the bioprocessing market.
In its statement announcing the deal, Danaher said it entered into the agreement with Sartorius “as a step towards obtaining regulatory approval for its pending acquisition of the GE Biopharma business.” Danaher agreed in February to buy the biopharma business of GE Life Sciences for $21.4 billion cash, in a deal designed to enhance the buyer’s bioprocessing offerings and pay down the seller’s debt.
As late as its Form 10-Q quarterly report for the second quarter of this year, filed July 17, Danaher expected at least some of the businesses it is now selling off to be part of the combined company: “The GE Biopharma acquisition is expected to provide additional sales and earnings growth opportunities for the company’s Life Sciences segment by expanding the business’ geographic and product line diversity, including new product and service offerings in the areas of process chromatography and consumables, cell culture media, single-use technologies, development instrumentation, and consumables that complement the company’s current biologics workflow solutions.”
Danaher’s sell-off to Sartorius is expected to close in the first quarter of 2020. That deal is subject to regulatory approval, as are also Danaher’s acquisition of the GE Biopharma business, the set of businesses Danaher plans to sell, and the approval of Sartorius as the buyer.
“This represents a significant step in the regulatory process toward closing the GE Biopharma acquisition,” Danaher president and CEO Thomas P. Joyce, Jr., said in a statement. “While timing around meeting all closing conditions, including regulatory approvals, is still uncertain, we remain very encouraged by the progress to date.”
Danaher has projected that GE Biopharma will generate annual revenue of approximately $3.2 billion in 2019, with approximately 75% of these revenues considered recurring.
Added Kreuzburg: “We look very much forward to welcoming the new teams to Sartorius and to jointly combine our capabilities for the benefit of our biopharma and life science customers.”