GE clinches Amersham for £5.7bn

Both sides braced for long battle with competition authorities * Analysts say GE paying a full price
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The Independent Online

General Electric, the US mega-conglomerate, snapped up the FTSE 100 medical technology group Amersham yesterday for £5.7bn, or 800p a share.

The deal brings together GE's medical systems division, which builds MRI scanners and other diagnostics machines, with the Amersham business making radioactive dyes and other chemicals used to enhance the images from scans. Both sides are braced for a long battle to get the deal through regulators, although they are confident it will complete before the middle of next year.

Sir William Castell, the chief executive, is joining the main GE board and running its healthcare technologies division from Amersham's headquarters in Buckinghamshire.

He will head a division with annual sales of $13bn (£7.8bn) and dismissed suggestions that GE had plans to sell off some parts of Amersham. The company also makes equipment used in the manufacture of biotech drugs and laboratory systems used in drug research - both of which will be new areas for GE. Jeff Immelt, GE chief executive, said he shares Sir William's vision of "personalised medicine", where diagnostic equipment and drug discovery systems will be used together to develop and prescribe particular types of drugs for particular types of patients.

Mr Immelt said: "The drug discovery business was one of the things that made Amersham more attractive to us."

Sir William, 56, personally pockets a £4m windfall from his stake and options in Amersham. He has faced considerable scepticism from the City over whether the various parts of Amersham form a coherent whole, but friends say he is excited to have the chance and the resources at GE to prove they can work together. One said: "I think he will stick around until he can say 'I told you so'."

The deal is the culmination of two years of flirtation between the two chief executives. The companies have been collaborating on product development since 2001. Finalised at midnight Thursday, the deal gives investors 0.4367 shares in GE for every Amersham share they hold. That represents a 45 per cent premium to its share price on Tuesday before news of the talks leaked, and the ratio of GE stock will be adjusted to guarantee the acquisition price is between 800p and 808p per share.

Small shareholders can elect to have them sold at no charge and the proceeds returned in cash. And institutional invest-ors who are unwilling or unable to hold US paper should have little trouble cashing them in, Mr Immelt said, since GE shares were among the world's most heavily traded. Annual cost savings of up to $200m will be made mainly through an undecided number of job losses among administrative staff.

Analysts signalled that the growing power of GE's healthcare business might lead the competition authorities to examine the deal, which is conditional on getting regulatory approval. Amersham has 38 per cent of the market for imaging agents, while GE is the market leader in scanners.

Sources close to the deal conceded that bundling of the equipment with the consumable products might be questioned. One said: "There is no prima facie anti-trust concern, but nobody really has a firm view. Everyone recognises that this process could take a certain length of time, so Amersham shareholders will be getting dividends at the end of each period, for example, and the price is a good price to reflect the time it may take."

Analysts said that GE is paying a full price for Amersham and a counterbidder was unlikely. Ian Broadhurst of Dryden Financial said: "This looks from the outset a knock-out bid, towards the top end of our valuation.

"Other big medical equipment companies like Siemens, Philips and Toshiba don't have the 'previous' that GE has, not only with Amersham but also in terms of UK presence."

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