GE Healthcare (GE) to Acquire BK Medical for $1.45 Billion, Seen as a 'Solid Fit'

September 24, 2021 8:49 AM EDT
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Yesterday, General Electric (NYSE: GE) announced it will acquire BK Medical for $1.45 billion in cash.

The medical company, which has headquarters in Copenhagen and Boston, offers intraoperative imaging and surgical navigation services.

“Ultrasound today forms an integral part of many care pathways, and BK Medical is a strategic and highly complementary addition to our growing and profitable Ultrasound business. This transaction helps GE Healthcare continue to expand beyond diagnostics into surgical and therapeutic interventions, simplifying decision-making for clinicians and equipping them with greater insights to deliver faster, more personalized care for their patients,” GE Healthcare President and CEO Kieran Murphy said.

Citi analyst Andrew Kaplowitz has weighed in on the acquisition with positive comments, although he notes GE is paying “full price” for BK Medical.

“We view the bolt on acquisition of BK Medical as an appropriate tuck-in sized acquisition into GE’s Healthcare business, which could potentially add an incremental step up in the segment’s growth and arguably more importantly indicates the company’s confidence in its FCF generation/BS as well as a strategic shift to playing offense,” the analyst said in a client note.

“BK Medical’s surgical visualization offerings should create room for cost and revenue synergies in the context of GE Healthcare’s existing $3bn ultrasound business (BK likely a couple hundred million dollars annual revenue). Given GE’s rightsizing of Power and a potentially extended recovery in Aero, we view Healthcare as a likely medium through which GE can augment its growth profile. Outside of the deal itself, we believe that the acquisition represents noteworthy messaging that GE is confident in its FCF generation capability and, we think, shifting its strategy to playing offense in improving its top-line and profitability.”

Kaplowitz has a $136.00 per share price target on GE.

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