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Abbott Boosts Cardio Device Business With $25 Billion St. Jude Buy

Two giants in cardiac devices agreed to merge Thursday, as Abbott Laboratories ( ABT ) announced an agreement to acquire  St. Jude Medical ( STJ ) in a deal worth $25 billion. Abbott agreed to pay $46.75 plus 0.8708 Abbott share for every St. Jude share. Based on Abbott’s five-day average share price, the deal valued St. Jude shares at $85 apiece. St. Jude stock was up more than 25% in morning trading on the stock market today , near 78, while Abbott stock was down more than 7%, below 41. Abbott said that the deal will add 21 cents to its EPS next year and 28 cents the following year. It expects to save $500 million in costs from the combination by 2020. Abbott will also assume or refinance St. Jude’s $5.7 billion in debt. The move will greatly enlarge Abbott’s cardiovascular device business, which now represents 19% of its revenue. “St. Jude Medical’s strong positions in heart failure devices, atrial fibrillation and cardiac rhythm management complement Abbott’s leading positions in coronary intervention and transcatheter mitral repair,” said Abbott’s press release. “Together, the company will compete in nearly every area of the cardiovascular market and hold the No. 1 or 2 positions across large and high-growth cardiovascular device markets.” Leerink analyst Danielle Antalffy agreed. St. Jude’s flat-to-negative sales growth over the last few years picked up to 8% in Q1, and she wrote in a research note that it’s set up to continue, while Abbott looked to be growing only in the low single digits. Antalffy also wrote that a competing bid is unlikely. “The most logical buyer beyond Abbott in our view would be Johnson & Johnson ( JNJ ),” Antalffy wrote. “In our meetings with J&J in mid-2015, management emphasized that the company is not interested in what they deemed ‘value’ markets within MedTech, specifically calling out cardiac rhythm management (nearly 30% of St. Jude’s total sales) and drug-eluting stents.” The deal announcement came on a busy day for M&A in medical field. Biotech Medivation ( MDVN ) confirmed that it had received an unsolicited $9.3 billion bid from big pharma Sanofi ( SNY ), while AbbVie ( ABBV ), which used to be Abbott’s biopharma division before it was spun out, agreed to buy another cancer-focused biotech, Stemcentrx, for $5.8 billion.

Abbott Labs Will Buy St. Jude Medical For $25 Billion

Abbott Laboratories ( ABT ) agreed to buy St. Jude Medical ( STJ ) in a deal that values the maker of heart devices at $25 billion, making its biggest ever acquisition as the industry consolidates to gain bargaining power with hospitals. St. Jude Medical shareholders will receive $46.75 in cash and 0.8708 share of Abbott common stock, representing a total of approximately $85 per share, according to a statement Thursday. Medical devices makers are merging to get access to new technology as hospitals push for lower prices. St. Jude last year acquired Thoratec for $3.4 billion, adding left ventricular pump devices that take over for a failing heart. The combined Abbott-St. Jude medical company will have a pipeline of new medical device products across cardiovascular, diabetes, vision and neuromodulation patient care, according to the statement. Abbott said in the statement it has financing for both St. Jude Medical and for its planned acquisition of Alere ( ALR ) for $5.8 billion, sending Alere shares higher in early trading on the stock market today . Abbott Chief Executive Officer Miles White declined to reiterate his commitment to the Alere deal last week on the company’s earnings call. Alere hasn’t yet filed its 10-K report with U.S. regulators and has been subpoenaed by the Justice Department. St. Jude Medical closed Wednesday at $61.95, giving the company a market value of about $17.6 billion. The stock jumped to $78.66 before the markets opened in New York. Abbott dropped 5 percent to $41.65 in early trading, while Alere rose 3.5 percent to $44.35. The acquisition will further reshape Abbott, which split off its brand name pharmaceutical business to AbbVie ( ABBV ) in 2013. Since then, the company has shied away from major acquisitions and pursued many smaller deals, even as the CEO talked often about his desire for larger purchases. Abbott has cash on hand, obtained by selling its generic drug business for medicines marketed in Europe and the developed world to Mylan ( MYL ).

Apple Crosses Key Support Level, Joining Netflix, But Can It Hold It?

Update: Apple ( AAPL ) stock rose 1.2% to 111.75 on Wednesday morning, retaking its 200-day moving average after several big-cap peers did so on Tuesday. But can the iPhone maker finally close above this level, and turn resistance into support * * * Netflix ( NFLX ), Schlumberger ( SLB ), AbbVie ( ABBV ) and MasterCard ( MA ) all rose above their 200-day moving averages Tuesday, while Apple shares continued to close just below that support level. It’s not a huge surprise that several big-cap stocks retook their 200-day lines. The Nasdaq also did so on Tuesday. The Dow and S&P 500 have been above that level for weeks. Still, it’s a key step on the road to recovery. Netflix Netflix, which reports Q1 earnings on Monday, rose 4.2% on the stock market today to 107, its best level since late January. Netflix had run into resistance for several sessions just below  the 200-day. Netflix has been consolidating since peaking at 133.27 on Dec. 7.  (Netflix jumped 3.3% Wednesday morning to its highest since mid-January.) Schlumberger Schlumberger rallied along with the energy sector, as crude futures rose above $42 a barrel to a 4-month high. Schlumberger rose 2.7% Tuesday to 75.90, topping its 200-day line for the time since last June. (Schlumberger rose fractionally Wednesday morning.) AbbVie AbbVie rose 2.4% Tuesday, just getting above its 200-day line. It hasn’t been consistently held above that level since last August. Late Monday, the FDA approved a leukemia drug by AbbVie and Roche ( RHHBY ) unit Genentech. (Wednesday morning, AbbVie fell 1.6%, once again dropping below the 200-day.) MasterCard MasterCard rose 0.4% Tuesday to 93.86. The stock has been finding support at or above its 200-day line for the past few weeks. The stock is forming a cup-with-handle base going back to Nov. 11.  (On Wednesday morning, MasterCard rose 1%.) Apple As for Apple, shares rose 1.3% to 110.44 on Tuesday, just below the 200-day line at 110.78. Apple crossed its 200-day on April 4 intraday, but has yet to close above that level since early October.