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Abbott to purchase St Jude Medical in $25 billion deal

Published on 28/04/16 at 12:50pm

Abbott (NYSE: ABT) has announced an agreement to purchase device manufacturer, St Jude Medical, in a deal worth $25 billion.

Under the terms of the deal, St Jude Medical shareholders will receive $46.75 in cash and 0.8708 shares of Abbot common stock, representing a total of $85 per share.

St Jude Medical boasts strong offerings in heart failure devices, atrial fibrillation and cardiac rhythm management and will complement Abbott’s positions in coronary intervention and transcatheter mitral repair.

The combined company will have a pipeline expected to deliver a steady stream of new medical device products in the fields of cardiovascular, diabetes, vision and neuromodulation patient care.

Miles D White, chairman and chief executive officer at Abbot, says: “Bringing together these two great companies will create a premier medical device business and immediately advance Abbott’s strategic and competitive position. The combined business will have a powerful pipeline ready to deliver next-generation medical technologies and offer improved efficiencies for health care systems around the world.”

Michael T. Rousseau, president and chief executive officer at St Jude Medical, comments: “Our combined scale will expand the global reach, competitiveness and impact of our medical device innovation for physicians and hospitals. This transaction provides our shareholders with immediate value and the opportunity to participate in the significant upside potential of the combined organisation.”

Financially, Abbott indicate that the acquisition is expected to increase adjusted earnings per share in the full first year after closing the deal and increasing thereafter, reaching 29 cents in 2018. St Jude Medical’s net debt of $5.7 billion is set to assumed or refinanced by Abbott. The company indicate that they intend to fund the cash portion of this transaction with medium-and long-term debt.

The transaction is expected to close in Q4 of 2016.

Sean Murray

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