St. Jude Medical (STJ) to Be Purchased by Abbott Labs in $25B Deal

Shares of St. Jude Medical Inc. (STJ) were trading up +16.81 or +27.13 percent to $78.76 after news broke early this morning that the company entered into a definitive agreement to be acquired by Abbott Labs (ABT) for $25 billion. St. Jude Medical Inc. stock closed at $61.95 per share, up +1.77 or +2.94 percent in Wednesday’s regular trading session.

Little Canada, Minnesota based St. Jude Medical Inc. was founded in 1976 to develop bi-leaflet artificial heart valves originally devised at the University of Minnesota in 1972.
The company then went public in February of 1977 with the company’s first artificial heart valve implanted in a human patient in October of that year. The company has since become a major transnational medical device company with more than 20 main manufacturing and operations facilities worldwide, marketing its products in over 100 countries in the Americas, Europe and Asia.

Founded in 1888 by Dr. Wallace Calvin Abbott, Lake Bluff, Illinois based Abbot Labs is a global health care company with a wide variety of medical devices, branded generic pharmaceuticals, diagnostics and nutrition products. The company provides diagnostic instrument systems used by laboratories, hospitals, blood banks and physicians offices for the diagnosis and monitoring of hepatitis, cancer, heart failure, HIV and metabolic disorders. Abbott Labs employs more than 70,000 people worldwide with operations in over 150 countries.

The definitive agreement announced this morning will have Abbott pay St. Jude shareholders $46.75 in cash and 0.8708 shares of Abbot common stock, which represents a total consideration of approximately $85 per share. With the price of Abbott stock at $43.93, the total transaction equity value of the deal comes to $25 billion.

Michael T. Rousseau, St. Jude Medical President and Chief Executive Officer said in this morning’s press release that, “Today's announcement is an exciting next chapter for St. Jude Medical, bringing together two industry leaders with a shared passion for innovation, culture and patients. 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. 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.”

With combined sales of $8.7 billion, Abbott’s cardiovascular business and St. Jude Medical will hold the number one or two positions in the high growth cardiovascular device market and have an industry leading pipeline. The merger is expected to produce a steady stream of new medical device products for patients in need of diabetes, cardiovascular, vision and neuromodulation care.

The acquisition is expected to be accretive to Abbott’s adjusted earnings per share in the first full year following the close of the transaction and increase afterwards, with accretion of $0.21 in 2017 and $0.29 in 2018. The combined company is expected to result in annual pre-tax synergies of $500 million by 2020, which include both operational and sales benefits. In addition, Abbott will assume or refinance approximately $5.7 billion of St. Jude Medical’s net debt.

The transaction has been approved by the board of directors of both companies and is subject to the approval of St. Jude Medical shareholders and the customary closing conditions, which include regulatory approvals. The transaction is expected to close by the fourth quarter of this year.

Other News About STJ

St. Jude Medical Announces New EnSite Precision Cardiac Mapping System Limited Market Release in Nine Countries Across Europe Since CE Mark

New generation cardiac mapping system will be used on over 600 cases in nine European countries.

St. Jude Medical Reports First Quarter 2016 Results

Company reported earnings per share of $0.90 and net sales of 1.448 billion in the first quarter of 2016.
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Published on Apr 28, 2016
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2020. Content published with author's permission.

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