The Strategist

Abbott Laboratories to buy St. Jude Medical

04/29/2016 - 17:15

On Thursday it became known that the American pharmaceutical company Abbott Laboratories is going to buy manufacturer of medical devices St. Jude Medical for $ 25 billion. The transaction will create one of the world’s leaders in the market of devices for the diagnosis and treatment of diseases of the cardiovascular system. Also today, the French Sanofi made a bid for $ 9.3 billion to the American manufacturer of cancer drugs Medivation.

Open Grid Scheduler / Grid Engine
Open Grid Scheduler / Grid Engine
On Thursday, the US pharmaceutical company Abbott Laboratories has announced its intention to purchase St. Jude Medical, specializing in the manufacture of medical devices, especially devices for diagnosing and treating diseases of the cardiovascular system. The two companies together will create one of the largest manufacturers of such devices in the world. The deal amounts to $ 25 billion. St. Jude Medical’s shareholders will receive $ 46.75 per share in cash and 0.8708 shares of Abbott, i.e. a total of $ 85. Thus the premium, in comparison with the stock price of St. Jude Medical on Wednesday, will be 37%. The Boards of Directors of both companies have approved the deal, but it still requires the sanction of shareholders and regulators. It is expected that the transaction will be completed in the fourth quarter of this year.

In a statement, Abbott Laboratories said that the deal will create a market leader in medical devices. This step will combine St Jude Medical’s strong stance in instruments to combat heart failure, cardiac catheters and defibrillators with Abbott’s positions in coronary angioplasty and restoration of the heart valve. Joined sales of these devices are expected to be $ 8.7 billion per year. According to Abbott’s CEO Miles White, the merger will allow the company to successfully compete in the increasingly consolidating pharmaceutical market. Last year alone, the pharmaceutical market had seen several large mergers and acquisitions. Shire bought biotech company Dyax for $ 5.9 billion, Pfizer agreed to buy Hospira for $ 15 billion, Valeant Pharmaceuticals International purchased Salix Pharmaceuticals for $ 10.1 billion, Abbvie announced the acquisition of Pharmacyclics for $ 21 billion, and Actavis bought Allergan for $ 66 billion.

Also on Thursday, it became known that French pharmaceutical company Sanofi wants to buy American cancer drugs manufacturer Medivation. Sanofi made the proposal for a deal valued at $ 9.3 billion. Sanofi is offering $ 52.5 per Medivation’s share. This is 36% higher than the company’s shares value a month ago, yet only slightly more than their value on Wednesday, when Sanofi announced its intention - $ 52.05. According to experts, Sanofi may be involved in a long struggle for Medivation, which seem alluring for British AstraZeneca and Japanese Astellas Pharma. According to Reuters, at the end of March Sanofi’s CEO Olivier Brandicourt contacted Medivation about the deal, the company’s CEO David Hung refused to meet with him and said that the board is not interested in discussing the deal.