Abbott Laboratories, the US pharmaceutical and healthcare company, is preparing a takeover bid for St Jude Medical that is likely to value the medical device maker at $25bn, people familiar with the matter have said.
Illinois-based Abbott has been working with advisers — thought to include JPMorgan and Citi — for several weeks, the people added, lining up the financing for a cash and shares offer.
Sources nevertheless cautioned that a bid has not yet been tabled and may not materialise. Abbott declined to comment. St Jude did not immediately respond to request for comment.
Abbott and St Jude, which is based in St Paul, Minnesota, already have a strong alliance in the field of cardiovascular devices, and sell their portfolio of products jointly to hospitals. A full merger would potentially give the enlarged company greater leverage in negotiating with all healthcare providers.
If a bid materialises, it would add to the wave of mergers and acquisitions that has swept the healthcare and pharmaceuticals sectors over the past two years as drugmakers scramble for growth assets and greater scale. About $400bn worth of transactions have been announced since January — the largest value of dealmaking in such a period ever seen in the sector, according to Thomson Reuters.
St Jude Medical, which has a market capitalisation of about $19bn, recently agreed to acquire US-listed Thoratec for about $3.4bn in cash.
Abbott is believed to have considered moving on St Jude earlier in the year, but was waiting for clarity on the future of Mylan, the generic drug specialist in which Abbott has a 15 per cent stake. Abbott’s holding dates from a deal 12 months ago, when Abbott sold Mylan its developed market generic drugs business for $5.3bn in stock.
Mylan, in turn, has had to wage an aggressive defence against a takeover by Israeli drugmaker Teva Pharmaceuticals, which finally abandoned its pursuit at the end of July.
While Abbott supported Mylan’s determination to remain independent, a takeover by Teva would have replenished Abbott’s cash war chest. Nevertheless, Abbott is said to be confident it can now fund a full offer for St Jude.