J&J Nears Deal to Buy Abbott's Eye-Surgery Unit
September 16 2016 - 1:20PM
Dow Jones News
Abbott Laboratories is in advanced talks to sell its eye-surgery
equipment business to Johnson & Johnson as the health-care
giants remake their lineups of medical devices.
A deal for the Abbott business, formerly known as Advanced
Medical Optics, could be announced as soon as Friday, according to
people familiar with the matter. As always, the talks could fall
apart before an agreement is reached. It isn't clear how much
J&J would pay for the business, now known as Abbott Medical
Optics, but Abbott bought it for $2.8 billion, including debt, in
2009.
It also isn't clear why Abbott wants out of a business it bought
not that long ago, but AMO sales have been sluggish, and the Abbott
Park, Ill., company has been doing deals in faster-growing device
segments. The biggest of those is a roughly $25 billion pending
agreement to buy St. Jude Medical Inc. and its portfolio of heart
valves, pacemakers and other cardiovascular devices.
Abbott also has agreed to buy a health-testing company, Alere
Inc., for about $5 billion, though it has sought to scotch the deal
amid a foreign-corruption investigation that Alere faces. Alere in
August filed a lawsuit to force Abbott to complete the
acquisition.
There has been a wave of mergers among medical-device companies,
which are facing intensifying competition and pricing pressure from
networks of hospitals that have themselves been consolidating.
Abbott's medical-optics business makes equipment used in
cataract and LASIK vision-correction surgeries, as well as contact
lenses. Last year, it notched $1.1 billion in sales, down 6.9%,
largely because of a strong dollar. Sales have been picking up this
year.
J&J, based in New Brunswick, N.J., also has been acquiring
medtech assets as part of efforts to accelerate growth in the unit.
In 2012, it bought Synthes Inc., a maker of devices used to treat
fractures and traumatic injuries, for roughly $20 billion.
The AMO business would add to J&J's lineup of surgical
equipment. It also would complement J&J's portfolio of contact
lenses and solutions, part of a $7 billion segment of the $68
billion global eye-health market. It would give J&J more
products to pump through its distribution network—and for
salespeople to discuss with doctors, common motivations for
health-care mergers.
Last year, J&J notched $25.1 billion in medical-device
sales, while Abbott had $20.4 billion in total revenue.
Write to Jonathan D. Rockoff at Jonathan.Rockoff@wsj.com, Dana
Mattioli at dana.mattioli@wsj.com and Dana Cimilluca at
dana.cimilluca@wsj.com
(END) Dow Jones Newswires
September 16, 2016 13:05 ET (17:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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