The U.S. Federal Trade Commission revealed on Tuesday that they are approving the bid of Abbott Laboratories (NYSE:ABT) to buy St. Jude Medical of Minnesota, the makers of medical devices such as pacemakers and heart valves. Abbott is headquartered in Chicago, Illinois, and operates in more than 150 countries. It is a crucial antitrust approval for the business. The total worth of the acquisition has been estimated to be $25 billion.
The Concerns of Federal Trade Commission
FTC or the Federal Trade Commission was concerned about two medical devices that are used in cardiovascular procedures. FTC had earlier said the purchase would stifle competition, pointing out that the combined business will control 70 percent of the market of vascular closure devices, which are used for closing holes in arteries caused by inserting catheters. Abbott Laboratories had to agree to sell off these two device businesses in exchange for the approval.
Abbott’s steerable sheath will now be purchased by Terumo Corp of Japan, while the vascular closure device of St. Jude Medical is also going to be sold off. Abbott has also agreed to sell a part of their medical device making to Terumo, which is going to fetch the business $1.12 billion. The products of this Japanese company have been available in the US for more than 30 years.
Abbott Faced Problems in Europe Too
There were similar problems in Europe earlier as well, but the European antitrust enforcers finally issued their approval in November, on the condition that the two devices will be divested. Referring to the case in the United States, the spokeswoman of Abbott, Elissa Maurer had said, “We continue to work to obtain final regulatory approvals and anticipate closing before the end of the year or shortly thereafter”. So the approval comes just in the right time for the business.
St. Jude Medical Abbott was both unavailable for comments after the news.
Abbott Laboratories wanted to buy St. Jude as the acquisition will help them compete with bigger rivals like Boston Scientific Corp (NYSE:BSX) and Medtronic. More and more hospitals are reducing the number of suppliers now to have better controls.
Cardiovascular devices and diagnostics have become a priority of Abbott Laboratories (NYSE:ABT) recently. To focus better on these two divisions, they had even sold off the medical optics division to Johnson & Johnson earlier in 2016 for $4.3 billion. Earlier in 2013, Abbott had divested their pharmaceuticals business too.