Global medical device manufacturers Abbott and St. Jude Medical have reached a definitive agreement for Abbott to acquire St. Jude Medical.
Here are nine things to know about the deal.
1. Under the agreement, St. Jude Medical shareholders will receive $46.75 in cash and 0.8708 shares of Abbott common stock, representing total consideration of approximately $85 per share, according to a news release. At an Abbott stock price of $43.93, this represents a total transaction equity value of $25 billion.
2. With combined annual sales of approximately $8.7 billion, Abbott's cardiovascular business and St. Jude Medical will hold the No. 1 or 2 positions across large and high-growth cardiovascular device markets and will compete in nearly every area of the market — with an aggregate market opportunity of $30 billion, both parties said.
3. The combined pipelines are expected to bring numerous new medical device products to key markets this year, including: St. Jude Medical's EnSite Precision next-generation cardiac mapping system and Abbott's FreeStyleLibre, a sensor-based glucose monitoring system for people with diabetes that eliminates routine finger sticks.
4. Miles D. White, chairman and CEO of Abbott, expressed excitement about the deal. "Bringing together these two great companies will create a premier medical device business and immediately advance Abbott's strategic and competitive position," he said in a prepared statement. "The combined business will have a powerful pipeline ready to deliver next-generation medical technologies and offer improved efficiencies for healthcare systems around the world."
5. Michael T. Rousseau, St. Jude Medical president and CEO, shared Mr. White's enthusiasm. "Our combined scale will expand the global reach, competitiveness and impact of our medical device innovation for physicians and hospitals. This transaction provides our shareholders with immediate value and the opportunity to participate in the significant upside potential of the combined organization," he said in a prepared statement.
6. The acquisition of St. Jude Medical is expected to be accretive to Abbott's adjusted earnings per share in the first full year after closing and increasing thereafter, with approximately 21 cents of accretion in 2017 and 29 cents in 2018.
7. St. Jude Medical's net debt of approximately $5.7 billion will be assumed or refinanced by Abbott. Abbott intends to fund the cash portion of this transaction with medium- and long-term debt.
8. The transaction, which has been approved by the boards of directors of St. Jude Medical and Abbott, must still be approved by St. Jude Medical shareholders and the satisfaction of customary closing conditions, including specified regulatory approvals.
9. The transaction is expected to close in the fourth quarter of 2016.
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