Analyst Sees No Major Concerns on Regulatory Front for Abbott-St. Jude Medical Deal
As Abbott Laboratories (ABT) - Get Report and St. Jude Medical (STJ) work on getting regulatory approval for their merger, Wedbush Securities analyst Tao Levy wrote in a July 15 note that he does not see major concerns on that front besides "some relatively minor divestitures" that may be needed for the deal to go through.
On July 11, Abbott Park, Ill.-based Abbott and St. Paul, Minn.-based St. Jude Medical received a second request from the Federal Trade Commission on the transaction.
Abbott said April 28 it would spend $30.7 billion including assumed debt to acquire St. Jude Medical. Abbott said in the announcement that St. Jude's heart-failure devices, atrial fibrillation products and technology to manage cardiac rhythm, mesh well with its own product lineup, which includes coronary stents.
In his note, Levy said that at this point, he doesn't expect to see any rival offers to emerge for St. Jude, pointing to the "strong strategic fit and minor overlap between ABT and STJ's product pipeline and portfolios."
Levy wrote that with the deal expected to close by year-end, "the unlikelihood of a competing bid, and no major concerns on the regulatory front," he downgraded St. Jude Medical's stock to neutral from outperform. Levy upped the price target to $84 from $70 to reflect the value of Abbott's offer.
In afternoon trading on Friday, shares of St. Jude Medical were changing hands at $80.50, down 0.28% and Abbott shares were trading at $42.12, down 0.38%.
Both companies are scheduled to report second quarter results before the open on July 20.
Analysts expect St. Jude to report adjusted earnings per share of $1.06 on revenue of $1.55 billion, and analysts are forecasting adjusted EPS of 53 cents on revenue of $5.25 billion for Abbott, according to Bloomberg data.