- St. Jude shares retreat after gaining as much as 17 percent
- FT says Abbott has been working for banks for weeks on offer
Abbott Laboratories denied a report that it’s preparing an offer for St. Jude Medical Inc. that would value the maker of heart devices at about $25 billion.
St. Jude shares were up 3.7 percent to $71.88 at 10:07 a.m. in New York, after rising 17 percent in premarket trading following the report in the Financial Times. Abbott shares gained 1.8 percent to $44.77.
Abbott has been working with banks for several weeks to prepare a cash and stock offer, the FT said, citing people familiar with the matter. Advisers to the Abbott Park, Illinois-based company may include JPMorgan Chase & Co. and Citigroup Inc., it said.
Scott Stoffel, an Abbott spokesman, said the report wasn’t true. He declined to say whether Abbott was in talks with banks to raise money for any other activity.
A deal with St. Jude, which has a market capitalization of about $20 billion, would be Abbott’s biggest ever, according to data compiled by Bloomberg. The two companies already have an alliance to sell their portfolio of cardiovascular products jointly to hospitals. A combined business would have more negotiating power with health-care providers, the FT said.
Abbott, the world’s largest maker of heart stents and adult nutritional beverages, has been active in making deals since it spun off its former brand-name drug unit to create AbbVie Inc. in January 2013. It has made deals to purchase about a half-dozen companies since then, mainly focused on bolstering its portfolio of generic medicines sold in emerging markets, and medical devices.
The company also has a stockpile of about $11.2 billion in cash, equivalents and short-term items, according to data compiled by Bloomberg. That includes shares of Mylan NV that it received in exchange for the portion of its generic drug business that operates in developed countries. Chief Executive Officer Miles White said last month he is actively looking for future acquisitions, though desirable product portfolios and willing targets aren’t always available at the right price.
“While valuations are high, I think there’s a fairly robust set of opportunities that fit several of our businesses quite nicely and our strategies and intentions quite nicely,” White said on a conference call after earnings last month. “So I’m not sitting here on a pile of cash thinking there’s nothing out there of interest that fits us. Quite the contrary, I think there’s quite a lot out there that fits us well.”
St. Jude Medical last month agreed to buy Thoratec Corp., a maker of implants that aid failing hearts, for $3.4 billion in cash, bolstering its push into new and faster-growing markets as sales stagnate for its established products. That would be its largest acquisition to date.
Medical-device manufacturers are making acquisitions to get access to new technology as hospital customers push for lower prices on older products. Medtronic Plc, which competes with St. Paul, Minnesota-based St. Jude to sell cardiac devices, has made at least three small purchases since June and acquired Covidien Plc in January for $49.9 billion.