Johnson & Johnson agreed to buy Abbott Laboratories’ eye-surgery equipment unit for $4.33 billion, moving the health-care giant toward its goal of boosting its three core businesses.
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Rather than going down the hard path of trying to build up its presence in the already competitive lens market, Abbott has found a good home for a division that didn’t really have that much in common with the rest of its device business anyway.
The purchase price works out to about 3.6 times the $1.2 billion in sales that Wells Fargo analyst Larry Biegelsen estimates Abbott Medical Optics will bring in for 2016.
Abbott, a pharmaceutical company based out of Lake Bluff, Illinois, chose to exit the eye care segment called Abbott Medical Optics that makes lasers and other equipment used for cataract surgeries and laser vision correction procedures, which was not in synergy with its other businesses. But it doesn’t mean that Abbott is going to actually do both deals, as much as Alere shareholders seemed to hope was the case when they sent the company’s stock up about 2.7 percent on Friday.
Last Friday’s deal, which is expected to close in the first quarter of 2017, is expected to modestly add to J&J’s earnings immediately.
Abbott Medical Optics, which the company acquired for almost US$1.4bil in 2009, reported sales of US$1.1bil for 2015, J&J said last Friday. “Importantly, with this acquisition we will enter cataract surgery – one of the most commonly performed surgeries and the number one cause of preventable blindness”. These numbers are steadily rising because of population growth and increasing life expectancy. It also makes eye drops and cleaners for contact lenses.
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