Deal of the Month: $25 Billion Acquisition of St. Jude Med Cements Abbott as Leader in Cardiovascular Device Market

In a month with an unusually heavy volume of diagnostic deal making, the headline story was Abbott Laboratories’ $25 billion purchase of fellow device-making giant St. Jude Medical, which finally closed on Jan. 4.

Already a leader in stents and mitral valve repair (via its MitraClip device), acquisition of St. Jude’s heart failure and vascular disease products portfolio makes Abbott arguably the strongest player in just about all aspects of the $30 billion cardiovascular (CV) device market, not to mention one of the biggest overall medical device manufacturers in the world. “The addition of St. Jude Medical creates one of the broadest medical device portfolios in the world and provides a steady stream of technologies and therapies for many years to come,” according to a statement from Abbott CEO Miles White.

Almost Too Big to Happen

In fact, the sheer magnitude of the deal almost led to its undoing on antitrust grounds. Combined, the two companies had reported CV device revenues of $9.8 billion in 2016 and would have controlled over 70% of the market for vascular closure devices. Adding to the effect is what the U.S. Federal Trade Commission (FTC) characterized as St. Jude’s “near monopoly” in steerable sheaths sales.

Accordingly, both companies had to agree to divest substantial assets to gain FTC and European antitrust approval:

• Abbott had to sell off its Vado™ Steerable Sheath products; and
• Jude’s had to shed Angio-Seal™ and FermoSeal™ vascular closure products.

Tokyo-based Terumo Corporation has agreed to purchase all of the divested assets for a reported $1.12 billion in all-cash deal.