GE Goes Outside The Box In Healthcare

There is an old saying that if you are going to make predictions, you may as well make a lot of them. Even though I recently laid out multiple medical technology acquisition prospects for General Electric (NYSE:GE), GE managed to go off the board with an interesting purchase. 

On Friday morning, GE announced an agreement to acquire Clarient (Nasdaq:CLRT), a specialist in oncology diagnostics services. GE is paying cash in this deal, giving common shareholders $5 a share (versus Thursday's close of $3.74) and preferred shareholders $20 per share. That is a total deal value of $580 million for a company with about $100 million in trailing revenue.

As a major holder (more than 30 million shares as of September), Safeguard Scientifics (NYSE:SFE) will benefit significantly from this deal, booking roughly a $145 million gain in the transaction. (For more, see Is GE About To Stir Up The Medical Arena?)


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Lab Corp And Genzyme Find Some Common Ground

Apparently Genzyme (Nasdaq:GENZ) is not adverse to all deals, just the current deal that Sanofi-aventis (NYSE:SNY) is offering. On Monday morning, Genzyme announced that it had reached an agreement to sell Genzyme Genetics to Laboratory Corporation (NYSE:LH) for $925 million in cash. It had been widely known that Genzyme was looking to sell some non-core businesses (including a diagnostics product and pharmaceutical intermediaries), and Genyzme did not waste a lot of time finding a buyer.

A Buyer's Market for Labs
Although this division goes by the name of "Genzyme Genetics", it is basically a laboratory testing business; one that has a rather strong brand in prenatal and hematopathology testing. Accordingly, it fits in pretty well with Lab Corp.'s stated interest in expanding its genetic and esoteric testing business.

Genzyme made the unfortunate decision to sell in the middle of a tough market. Labs are struggling with weak volume as doctor visits are down and people seem to be foregoing health care during the current economic troubles. With weak volume and strong competition from major players like Lab Corp., Quest (NYSE:DGX) and Bio-Reference Laboratories (Nasdaq:BRLI), a lot of labs are choosing to sell out and routine deals are going for about 1.5x sales.

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