J&J to Buy Abbott's Eye-Surgery Unit for $4.325 billion -- 2nd Update
September 16 2016 - 5:55PM
Dow Jones News
By Jonathan D. Rockoff, Dana Mattioli and Dana Cimilluca
Abbott Laboratories agreed to sell its eye-surgery equipment
business to Johnson & Johnson for $4.325 billion as the
health-care giants remake their lineups of medical devices, the
companies said Friday.
The all-cash deal, previously reported by The Wall Street
Journal, gives J&J the No. 2 business in cataract surgeries, an
$8 billion global market that is growing about 5% a year, according
to the company.
Abbott had bought the eye business, then known as Advanced
Medical Optics, for $2.8 billion, including debt, in 2009. Abbott
is selling the business, now named Abbott Medical Optics, amid
sluggish sales and as the Abbott Park, Ill., company has been doing
deals in faster-growing device segments.
"We've been actively and strategically shaping our portfolio,"
focusing more on heart devices and expanding diagnostics," Chief
Executive Miles D. White said in prepared remarks.
The biggest of Abbott's recent deals 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 as Alere
faces a foreign-corruption investigation. 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.
The deal, expected to close by April, isn't seen changing
Abbott's earnings target for 2017.
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.
AMO, and its cataract-replacement lenses especially, will fit
naturally with J&J's eye-care unit and help it diversify into
the surgical suite and increase sales in emerging markets, she
said.
"We've always been interested in the broader eye-health
segment," Ms. McEvoy said in an interview.
The business complements 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.
J&J sees the deal immediately adding to its adjusted
earnings after the close.
Last year, J&J notched $25.1 billion in medical-device
sales, while Abbott had $20.4 billion in total revenue.
--George Stahl contributed to this article.
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 17:40 ET (21:40 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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