GE & Clarient Merger, Expanding Cancer Diagnostics (GE, CLRT, SFE)

Health and Healthcare

Published: October 22, 2010 8:14 am

Last Updated: April 27, 2020 9:58 pm

General Electric Company (NYSE: GE) is still doing M&A deals. The company has had its checkbook out lately and announcing ventures, and this morning came word from GE Healthcare that it was acquiring Clarient, Inc. (NASDAQ: CLRT) for roughly $580 million.

Clarient is in the molecular diagnostics sector, and the deal will increase GE’s presence in cancer diagnostics. Clarient’s revenues have grown at roughly 68% on a compounded annual growth rate since 2005. GE noted that the global demand for cancer-profiling products and services is expected to to grow from $15 billion currently to about $47 billion by 2015.

Clarient’s purchase price comes to $5.00 per common share and $20.00 per preferred share in cash, and the common shares closed at $3.74 on Thursday while the 52-week trading range is $1.88 to $3.80.

Safeguard Scientifics, Inc. (NYSE: SFE) may be the real winner here in the deal as Clarient is a partner company of Safeguard. The company is expected to receive net sale proceeds of approximately $145 million, and the taxable gain to Safeguard on the transaction will be offset by a portion of available tax loss carryforwards. Safeguard owns approximately 26% of Clarient outstanding shares on a fully-diluted as-converted basis, including 30.2 million shares of Clarient common stock plus 0.7 million warrants at various strike prices. At $13.70, Safeguard’s market cap was listed as a mere $281 million as of yesterday’s close. Its 52-week trading range is $8.60 to $14.35.

When I interviewed GE’s CEO Jeff Immelt at the annual meeting in Houston this year, Immelt discussed healthcare opportunities and ‘adjacencies’ to its existing portfolio. This fits into that strategy.

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JON C. OGG

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