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Abbott to acquire St. Jude Medical for $25 billion

por Gus Iversen, Editor in Chief | April 28, 2016
Business Affairs Cardiology Population Health
Abbott Tower at global
headquarters, Abbott Park,
Illinois
Courtesy: Abbott
This morning, Abbott announced it would be acquiring St. Jude Medical, Inc. for a total purchase price around $25 billion. St. Jude shareholders will receive $46.75 in cash and 0.8708 shares of Abbott common stock, representing about $85 a share.

Although cardiovascular disease will be the main driver, the combined company will also be a leader in developing diabetes, vision, and neuromodulation patient care products. In short, the transaction will create a powerful singular presence in the medical device market.

"Bringing together these two great companies will create a premier medical device business and immediately advance Abbott's strategic and competitive position," Abbott CEO Miles White said in a statement. "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."

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With combined annual sales of approximately $8.7 billion, Abbott's cardiovascular business and St. Jude Medical will hold the No. 1 or 2 positions across large and high-growth cardiovascular device markets, and will compete in nearly every area of the market – with an aggregate market opportunity of $30 billion.

Heart disease is the leading cause of death in the U.S., with 614,348 fatalities linked to the disease in 2014, according to the Centers for Disease Control and Prevention. By 2030, it is anticipated that more than 40 percent of adults will have cardiovascular disease in the U.S.

In the transaction, Abbott will acquire a number of new devices from St. Jude, including its first-to-market MultiPoint Pacing technology, which advances quadripolar technology and provides additional options for cardiac resynchronization therapy patients who are not responsive to other pacing options.

Abbott recently received a positive review from the FDA for its Absorb, the world's first bioresorbable coronary stent. The company also has other innovations expected to enter the market this year, such as FreeStyle Libre, a sensor-based glucose monitoring system for people with diabetes that eliminates routine finger sticks, and Tecnis Symfony, a first-in-kind continuous range of vision intraocular lens for the treatment of people with cataracts.

"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 organization," said Michael T. Rousseau, St. Jude Medical president and chief executive officer.

"I'd like to thank our 18,000 employees whose hard work and commitment help us deliver leading medical technologies to patients around the world," Rousseau added.

St. Jude Medical's net debt of approximately $5.7 billion will be assumed or refinanced by Abbott, which intends to fund the cash portion of this transaction with medium- and long-term debt.

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