Abbott Secures U.S. Antitrust Approval for $25 Billion Acquisition of St. Jude Medical to Enhance Competitiveness Against Medtronic and Boston Scientific

On December 27, Abbott Laboratories’ largest-ever acquisition made a breakthrough. The U.S. Federal Trade Commission (FTC) officially approved Abbott (NYSE: ABT) to complete its proposed $25 billion acquisition of St. Jude Medical (NYSE: STJ).

Earlier this year, the transaction received approval from the boards of directors of both companies. Abbott will pay in cash and stock valued at $15.1 billion, pending approval from shareholders and regulatory authorities. With official approval now secured, the completion of the acquisition will better leverage the synergies between the two companies.

Abbott and St. Jude Medical stated that the transaction would combine St. Jude’s strong advantages in heart failure treatment devices, cardiac catheters, and defibrillators with Abbott’s strengths in coronary intervention and valve repair, and they projected that it would generate $500 million in sales and operating earnings by 2020.

However, to address the Federal Trade Commission’s concerns, Abbott will divest two medical device businesses used in cardiovascular procedures—vascular closure devices and steerable sheaths—upon receiving FTC approval. As a step toward completing the transaction, Abbott will sell these specific cardiovascular assets to Japan’s Terumo Corporation (TYO: 4543) for approximately $1 billion.

The FTC stated that the purpose of the divestiture is to ensure that the acquisition does not result in “significant harm to competition in these two markets.” The agency also cautioned Abbott regarding whether it had acquired lesion-assessment ablation catheter assets from Advanced Cardiac Therapeutics. With only St. Jude Medical and one other company producing this technology, the FTC warned that acquiring a new developer in this field could further eliminate additional competition.

The consent agreement reached by the FTC on this matter will also be open for public comment for 30 days before a final decision is made.

Earlier this month, India’s antitrust regulator cleared the $25 billion deal. In a December 16 post on Twitter, the Competition Commission of India (CCI) stated that it had “approved the combination between St. Jude Medical and Abbott Laboratories; subject to voluntary remedies.”

Last month, the European Commission’s decision on the agreement required the divestiture of two device lines: St. Jude Medical must dispose of its Angio-Seal and Femoseal vascular closure device assets, including the manufacturing facility in Puerto Rico. Abbott must divest the Vado steerable sheath acquired earlier this year through its purchase of Kalila Medical. Both assets will be transferred to Terumo for $1 billion.

Abbott stated that the deal would help it compete with larger rivals Medtronic and Boston Scientific, as hospitals seek to reduce the number of their suppliers.