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

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.

You can join our free daily email distribution list to hear more about dividend trends, analyst upgrades and downgrades, top day trader and active trader alerts, news on Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more.

JON C. OGG