The megamerger trend in the medical device industry is showing no signs of slowing down, with Abbott inking a $25 billion deal to buy St. Jude Medical.
The deal is intended to make the company the number one or two in certain high-growth cardiovascular device markets. The merged company would have projected annual cardiovascular sales of $8.7 billion.
Although both boards have approved the transaction, approval from shareholders and regulatory clearances are still required. The companies expect the deal to close in the fourth quarter.
In related news, Abbott also provided an update on its $5.8 billion acquisition of diagnostics maker Alere. The deal would make Abbott the leading diagnostics provider of point-of-care testing, with total diagnostics sales exceeding $7 billion (IDDM, Feb. 5).
In a recent meeting, Abbott representatives told Alere that they had grave concerns about the deal after the diagnostics maker was subpoenaed for alleged FCPA violations for sales practices in Africa, Asia, and Latin America.
In an SEC filing, Alere said Abbott offered to terminate the deal and pay between $30 million to $50 million. Alere said its board rejected this request and that Abbott agreed to go through with the deal.
Larry Biegelsen, a senior analyst at Wells Fargo Securities, says his group thought Abbott and St. Jude should join, given that there is very little overlap and they can compete with rivals Medtronic and Boston Scientific. ― Joya Patel