Soon after the news of the merger broke, the St. Jude stock soared in premarket trading after news which spread like viral about the receipt of $85 per share in cash and Abbott stock for every shareholder of St. Jude. That’s 37% above St. Jude’s closing price on April 27.
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“St. Jude Medical’s strong positions in heart failure devices, atrial fibrillation, and cardiac rhythm management complement Abbott’s leading positions in coronary intervention and transcatheter mitral fix”, the statement said.
The deal shows Abbott’s appetite for acquisitions after agreeing to acquire Alere about three months ago for $5.8 billion.
The combined company will offer devices in almost every area of cardiovascular care, competing directly with industry leaders Medtronic PLC and Boston Scientific, both of which also have substantial Twin Cities operations.
Abbott shares had slid about 2 percent so far this year, as of Wednesday’s close, while St. Jude stock climbed less than 1 percent. Shares of Abbott plunged 7.8 percent. The company also failed to file a 2015 annual report with USA regulators.
Abbott, an industry leader in heart stents, has been bulking up its generic-drugs business in emerging markets and nutrition products sold directly to consumers in recent years.
St. Jude Medical has strong and leading positions around the world, strengthening Abbott’s global scale, infrastructure and capabilities.
St Jude Medical (NYSE:STJ)’s rating was lowered by investment analysts at JP Morgan from a “Overweight” rating to a “Neutral” rating in an analyst report revealed to clients on 29 April. According to Abbott, the combined company “will hold the number 1 or 2 positions across large and high-growth cardiovascular device markets and will compete in almost every area of the market”. Leverage was about 2.0 times before either of the two pending acquisitions as of the last published balance sheet in December, Levenson said in a follow-up email.
The companies pledged to find $500 million in annual pretax synergies by 2020, “including both sales and operational benefits”, their joint statement says. Bloomberg reported last summer that a deal was under discussion, but Abbott denied it.Asked on Thursday by analysts during a conference call, White said the talks did not begin until late past year.”I don’t know that anything has changed”, White said.
St. Jude and Abbott expect big things from the deal. Guggenheim Securities served as the financial adviser to St. Jude Medical.
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Abbott Laboratories (NYSE:ABT) opened trading today as $40.42 and is trading in the range of 39.99-41.69 today. White described areas like heart rhythm management as “stable, well established and even mature” and said he welcomed their “rock solid” contributions and potential for incremental innovation and growth.
