The story at General Electric
So far this month, we've seen GE throw down the gauntlet in front of oil and gas equipment majors Schlumberger
Now, with $5 billion spent out of the $30 billion it's promised to spend over the next two to three years, GE's gone shopping again. This time, it's moving in a direction of real growth: health care.
I see sick people
On Friday, GE announced it will ante up $580 million net of cash and investments to acquire all outstanding common and preferred shares of diagnostic equipment maker Clarient
Clarient is a leader in "oncology diagnostic services." While diagnosing cancer is certainly, and sadly, a growth business, the question is whether there's enough growth here to justify the price GE is paying.
Consider: $580 million is 5.8 times more than Clarient's $100 million in sales over the past 12 months. Admittedly, Clarient is expected to grow quite a bit faster than GE proper over the next five years. Still, with GE's own price-to-sales ratio of just 1.1, it's hard to argue GE is getting any sort of bargain here. What it is getting, though, is two new competitors. And it's hard to imagine tougher rivals to tackle than the twin behemoths of diagnostic testing, Quest Diagnostics
Personally, I think GE is biting off more than it can chew, and overpaying for the meal. But what do you think? Tell me in the comments section below.