Abbott agrees to buy St Jude Medical
ABBOTT Laboratories has agreed to purchase St Jude Medical in a deal that valued the maker of heart devices at $25 billion (R360bn), making its biggest acquisition as the industry consolidates to gain bargaining power with hospitals.
St Jude Medical shareholders would receive $46.75 in cash and 0.8708 shares of Abbott common stock, representing a total of about $85 a share, according to a statement yesterday.
Medical devices makers are merging to get access to new technology as hospitals push for lower prices. St Jude last year acquired Thoratec for $3.4bn, adding left ventricular pump devices that take over for a failing heart.
The combined Abbott-St Jude medical company would have a pipeline of new medical device products across cardiovascular, diabetes, vision and neuromodulation patient care, according to the statement.
Abbott said it had financing for both St Jude Medical and for its planned acquisition of Alere for $5.8bn, sending Alere shares higher in early trading.
Miles White, the Abbott chief executive, declined to reiterate his commitment to the Alere deal last week on the company’s earnings call. Alere has not yet filed its 10-K report with US regulators and has been subpoenaed by the Justice Department.
Market value
St Jude Medical closed on Wednesday at $61.95, giving the company a market value of about $17.6bn. The stock jumped to $78.66 before the markets opened in New York. Abbott dropped 5 percent to $41.65 in early trading, while Alere rose 3.5 percent to $44.35.
The acquisition will further reshape Abbott, which split off its brand name pharmaceutical business to AbbVie in 2013.
Since then, the company has shied away from major acquisitions and pursued many smaller deals, even as the chief executive talked often about his desire for larger purchases.
Abbott has cash on hand, obtained by selling its generic drug business for medicines marketed in Europe and the developed world to Mylan.