NEW YORK ( TheStreet) - Abbott Laboratories ( ABT) said Wednesday it will split itself into separate into two publicly traded companies; one focusing on medical products and the other on pharmaceuticals research and development. Abbott said that its medical products division will continue under its heritage name founded in 1888, and the research division will form a new publicly traded stock, not yet named. To make the split, current Abbott shareholders will be given stock in the new publicly traded company when it files an initial public offering.
Shares rose over 4.5% in early trading to $54.85. The company's stock has risen more than 10% this year outperforming the S&P 500. It also increased its quarterly dividend from 44 cents a share to 48 cents in April. In its announcement of the split, Abbot said that the dividend of the combined companies will match current levels and that the decision to spin its drug R&D division won't affect earnings-per-share. "Today's news is a significant event for Abbott, and reflects another dynamic change in our company's 123-year history, strengthening our outlook for strong and sustainable growth and shareholder returns," said Miles D. White, chief executive of Abbott in a statement announcing the deal. Abbott expects the deal to close at the end of 2012 and said in its statement that the board of directors has not yet approved the split, which is also pending approval from the IRS for its tax free nature. Abbott also expects one-time charges while the split is completed, to be quantified later. It did not yet announce any financial advisors. In its most recent quarter ended in September, Abbott announced that earnings and operating income had fallen by more than 50% from levels in the period a year earlier. The company's net income was $4.6 billion in 2010, below $5.7 billion earned a year earlier, but revenue grew to a record $35.1 billion. In 2010, Abbott bought European pharmaceutical and vaccines giant Solvay for roughly $6.6 billion in a push to expand its reach into Eastern Europe and Asia.