GE to acquire two core diagnostics businesses from Abbott for $8.13bn
Fairfield, Conn. and Abbott Park, Ill. USA. General Electric
Company (NYSE: GE) is to buy the in vitro diagnostics and point-of-care
diagnostics businesses from Abbott (NYSE: ABT), (formerly known as i-STAT)
for $8.13 billion in cash.
The two businesses will
broaden GE Healthcare’s diagnostic offerings. In vitro diagnostics
(tests blood or urine samples to diagnose disease or other conditions)
complement GE’s diagnostic imaging systems (in vivo imaging uses X-ray,
magnetic resonance, ultrasound or other imaging of the body to diagnose
disease), as well as its molecular imaging, information technology, and
patient monitoring capabilities across the complete healthcare continuum. The acquisition reflects GE Healthcare’s strategy to combine early diagnosis
with information technology to enable a new "early health" model of care
focused on earlier diagnosis, pre-symptomatic disease detection and disease
prevention. GE Chairman and CEO Jeffrey R. Immelt, said, “This acquisition is consistent
with GE’s strategy to invest in high-technology global infrastructure
businesses that deliver strong top-line growth, earnings expansion and
expanded margins. Abbott’s diagnostics business is the premier platform in
this industry and fits very well with our Healthcare strategy. Abbott’s
global position in the growing diagnostics field is aligned with our
objective to deliver a comprehensive array of diagnostic products to
customers around the world.” The transaction, which is subject to regulatory approvals and other
customary conditions, has been approved by the Boards of Directors of Abbott
and GE and is targeted to close in the first half of 2007. Abbott’s Molecular
Diagnostics and Diabetes Care businesses are not part of the transaction and
will remain part of Abbott. Abbott’s in vitro diagnostics business is a global leader with a strong
tradition of developing first-of-a-kind products that have helped create the
modern diagnostics industry. It is a world leader in immunoassays and blood
screening. Abbott’s broad range of medical tests and diagnostic instrument
systems are used to diagnose and monitor diseases such as HIV, hepatitis,
cancer, heart failure and metabolic disorders, as well as assess other
important indicators of general health. Abbott Point-of-Care manufactures diagnostic products for blood analysis to
provide health care professionals critical diagnostics information
accurately and immediately at the point of patient care. Abbott also
provides point-of-care cardiac assays to the emergency room. Abbott’s in vitro diagnostics business, including Point-of-Care, is expected
to generate net sales of approximately $2.7 billion for 2006. Miles D. White, Abbott’s Chairman of the Board and Chief Executive Officer,
said, “The laboratory diagnostics market has changed considerably in the
last decade. Innovation in this segment will be increasingly driven by
automation, system integration and a host of skills that GE can offer. As
part of GE, Abbott’s core diagnostics and point-of-care businesses will be
powerfully positioned to sustain and extend their market success.” For Abbott, the transaction is expected to be neutral to earnings-per-share
in 2007 before specified items and accretive thereafter.
GE said the transaction will be accretive to earnings. Joe Hogan, president and CEO of GE Healthcare, said, “Over the last 5 to 10
years, we have been able to drive organic growth as well as successfully
integrate major acquisitions like Amersham in a way beneficial to employees
and investors. Through this acquisition, we create the opportunity to
integrate our broad-based competencies in diagnostics, life sciences and
healthcare information technology. In-vitro diagnostics and in vivo imaging
continue to become more important in providing comprehensive diagnostic
solutions. Our capabilities combined with Abbott’s in vitro diagnostics and
point-of-care diagnostic businesses will allow GE to provide customers with
better tools for the full care continuum, enhancing their decision-making
capabilities in key disease areas such as oncology and cardiology, and
enabling early disease detection, diagnosis and treatment. ” To top
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