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Abbott's $25B Acquisition of St. Jude Medical Will Not Impact Alere Buy

NEW YORK (GenomeWeb) — Abbott said today that its deal to acquire St. Jude Medical for $25 billion in cash and stock does not conflict with its previously announced acquisition to buy Alere, and that its financing plan contemplates the completion of both transactions.

The announcement of the planned St. Jude purchase comes just shy of three months after the company said that it would acquire Alere for $5.8 billion. But industry analysts and investors have questioned the status of that deal after Alere revealed that it had been issued a US Department of Justice subpoena under the Foreign Corrupt Practices Act.

Specifically, the DOJ asked for "documents relating to, among other things, sales, sales practices, and dealings with third parties (including distributors and foreign governmental officials) in Africa, Asia, and Latin America," Alere said.

Further questions about the Alere deal were raised when Abbott CEO Miles White said in response to an analyst's question during the company's first quarter financials conference call last week that it was "not appropriate" to comment on the planned acquisition.

He added during that call that Alere had delayed filing its 10K as a result of the subpoena and that "we … don't know when they'll have a shareholder vote" on the transaction.

During a conference call today to discuss the St. Jude announcement, White indicated that his earlier statement was not meant to suggest the Alere deal was in jeopardy. "My comment last week was that it was inappropriate for me to comment about Alere — full stop."

He also stressed that "our financing plan contemplates broadly completion of both transactions — the capacity to do that, the capacity to fund with both debt and equity all of the things that are in our radar screen as a company, including our liquidity, et cetera."

White added that Abbott "can finance both [transactions] and remain investment-grade," but declined to comment further.

Under the terms of the St. Jude deal, St. Jude shareholders will receive $46.75 in cash and 0.8708 shares of Abbott common stock, representing a total consideration of around $85 per share. The acquisition, which is expected to close in the fourth quarter of 2016, will strengthen Abbott's portfolio in the cardiovascular medical devices market. 

In a research note issued today, Leerink Partners analyst Dan Leonard said that the investment bank believes that the odds of Abbott closing the Alere deal were "higher than assumed in the current stock price."

He added that White's declining to comment on the acquisition during the quarterly results conference call reflected "best practices surrounding high-profile deals with elements of uncertainty rather than waning deal commitment."

During mid-morning trading on the New York Stock Exchange, shares of Abbott were down nearly 7 percent at $40.97, while shares of Alere were up nearly 2 percent at $43.52.