Abbott said St. Jude’s heart-failure devices, atrial fibrillation products and technology to manage cardiac rhythm will mesh well with its own coronary-intervention product lineup.
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Under the terms of the agreement, shareholders of Textura will receive $26.00 in cash for each share of Textura common stock. St. Jude Medical has net debt of about $5.7 billion on its books, which will be assumed or refinanced by Abbott, which will fund the cash portion of the deal through medium- and long-term debt. It expects the deal to close during the fourth quarter of 2016.
“Bringing together these two great companies will create a premier medical device business and immediately advance Abbott’s strategic and competitive position”, said Miles White, chairman and CEO of Abbott. In contrast, St. Jude Medical shares closed about 3 percent higher on NYSE Wednesday and were trading about 27 percent higher during premarket trade Thursday morning. The move comes after years of speculation about the two medical device companies merging.
The combined company will offer devices in almost every area of cardiovascular care, competing directly with industry leaders Medtronic Inc. and Boston Scientific Corp.
The combined company expects to deliver “both sales and operational benefits” resulting in a $500 million pre-tax boost by 2020.
Abbott shares had declined about 2 percent so far this year, as of Wednesday’s close, while St. Jude stock climbed less than 1 percent.
In 2015, Abbott’s sales rose 0.8% to $20.4 billion, and its earnings almost doubled to $4.4 billion, which included a gain from the sale of discontinued operations. The acquisition, subject to regulatory approvals, will strengthen Abbott’s position in the market for medical devices used to treat cardiovascular diseases.
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Abbott agreed in February to pay $56 per share to acquire Alere, a 51% premium to the company’s share price before the deal’s announcement. Thursday, though, Abbott discussed plans to issue $3 billion of stock “to rebalance its capital structure” and help finance the Alere and St. Jude deals.
