St. Jude Medical: Abbott (ABT) to acquire St. Jude Medical for $46.75 in cash and 0.8708 shares of Abbott common stock, representing total consideration of ~$85/share
- At an Abbott stock price of $43.93, this represents a total transaction equity value of $25 bln. 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 ~21 cents of accretion in 2017 and 29 cents in 2018. The combination is anticipated to result in annual pre-tax synergies of $500 mln by 2020, including both sales and operational benefits. One-time deal-related costs and integration costs will be provided at a future date. St. Jude Medical's net debt of ~$5.7 bln will be assumed or refinanced by Abbott. Abbott intends to fund the cash portion of this transaction with medium- and long-term debt.
- The transaction, which has been approved by the boards of directors of St. Jude Medical and Abbott, is subject to the approval of St. Jude Medical shareholders and the satisfaction of customary closing conditions, including specified regulatory approvals. The transaction is expected to close in the fourth quarter of 2016.
- Separate Equity Issuance to Balance Capital Structure: Separately, Abbott expects to issue $3 bln of common stock in the secondary market to rebalance its capital structure, with timing to be determined. Financing for the St. Jude Medical transaction and the previously announced Alere Inc. acquisition contemplates financing capacity to close both transactions. These transactions are expected to be immediately accretive to adjusted earnings per share.
- Abbott will conduct a special conference call today at 7 a.m. Central time (8 a.m. Eastern time) to provide an overview of the transaction.
- Due to St. Jude Medical's entry into the Merger Agreement, its Annual Shareholder Meeting, which is currently scheduled for May 4, 2016, has been cancelled and will be rescheduled at a later date.