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. ”
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