Antitrust federal regulators have just approved the proposed acquisition of St. Jude Medical by Abbott Laboratories. The conditions imposed on the companies involve the divestment of two medical device businesses.
The newly formed conglomerate is bound to become one of the main actors in the market of medical devices used to treat heart conditions.
An Important Acquisition
The healthcare company Abbott Laboratories was allowed by regulators to acquire the company St. Jude Medical, with the transaction being estimated at $25 billion. Initially, the U.S. Federal Trade Commission showed concern related to the acquisition, which would have created a monopoly, but the problem was resolved by divesting two of the conglomerate's businesses.
Both divested companies were sold to Terumo, a healthcare company in Tokyo. The first of them is St. Jude's vascular closure device business. These devices are used to seal small orifices that appear in arteries after coronary angiograms (procedures that allow the detection of clogged or narrowed arteries), thus preventing bleeding.
The second company to be sold belongs to Abbott and is in charge of producing steerable sheaths, which are necessary when placing catheters into the heart. Terumo will pay $1.12 billion for the companies. As this process takes place, the acquisition will continue to be supervised by FTC, as stated by Elissa Maurer, spokeswoman for Abbott.
"We continue to work to obtain final regulatory approvals and anticipate closing before the end of the year or shortly thereafter," noted Maurer.
The European antitrust regulators had voiced the same concerns, but they approved the acquisition as soon as the sale of the two device companies mentioned above was agreed upon.
A Complex Market
Abbott Laboratories considers the move to be most necessary in order to be able to compete with other great players on the market like Boston Scientific or Medtronic, especially now that hospitals want to reduce their number of suppliers.
The divestment of the device companies is not something new for Abbott however, as its strategy involves concentrating more on cardiovascular devices. As a result, the company sold its optics division for more than $4 billion this year.
Earlier, it spun off its pharmaceuticals business as well. Moreover, Abbott is also trying to buy Alere Inc, a company active in the diagnosis market, but failure to comply with conditions led to the two companies currently suing each other.
St. Jude has also experienced difficulties recently because of one of its pacemakers, Nanostim, whose batteries were reported to malfunction. Although no one reported health problems because of the pacemakers, the image of the company suffered nonetheless.
