Abbott Laboratories' purchase of St. Jude Medical, which is expected to close tomorrow, will give it access to nearly every area of the $30 billion cardiovascular device market.
Suburban Chicago-based Abbott announced it will close the $25 billion deal less than a week after federal regulators approved the purchase on the condition that the companies divest from two businesses that produce certain cardiac devices. Abbott and St. Jude already rank among the nation's largest devicemakers.
The Federal Trade Commission determined that divestiture was necessary under the proposed deal because Abbott would have controlled over 70% of the market for vascular closure devices, and the merger would eliminate nearly all competition in the market for steerable sheaths, of which St. Paul, Minn.-based St. Jude had a near-monopoly. VCDs are used to close holes in arteries following the insertion of catheters.
Tokyo-based Terumo Corp., which has sold “related products and medical devices” in the U.S. will pick up the two companies in question. Terumo has not previously sold VCDs or steerable sheaths.
Abbott and St. Jude's combined cardiovascular and neuromodulation portfolio represents sales of over $8.7 billion. The acquisition rounds out Abbott's offerings in cardiac devices, combining its previous focus on coronary interventions and mitral valve diseases with St. Jude's leadership in atrial fibrillation, heart failure and structural heart devices.
The deal comes as hospitals and physicians practices look to streamline their device purchasing processes and consolidate vendor relationships. Doing so has the potential to decrease costs and improve efficiency.
Abbott's purchase of St. Jude , first announced in April 2015, is expected to be accretive to the company's earnings in the first full year and at an increasing rate thereafter. It should add about 21 cents to adjusted earnings per share in 2017 and an estimated 29 cents in 2018.