UPDATE: Abbott Announces Purchase of CFR Pharma, Purchase Price Will Be $2.9B Plus $430M in Assumed Debt

Abbott (NYSE: ABT) todayannounced a definitive agreement to acquire Latin American pharmaceuticalcompany CFR Pharmaceuticals, more than doubling its Latin American brandedgenerics pharmaceutical presence and further expanding Abbott's presence infast-growing markets. Under the terms of the agreement, Abbott will acquirethe holding company that indirectly owns approximately 73 percent of CFRPharmaceuticals and will conduct a public cash tender offer for all of theoutstanding shares of CFR. Assuming all publicly-held shares are tendered, thetotal purchase price would be approximately $2.9 billion, plus the assumptionof net debt of approximately $430 million.This acquisition immediately establishes Abbott among the top 10pharmaceutical companies in Latin America, further broadening Abbott'sgeographic presence across the region."With its scale and leadership positions in the region, strong commercial anddevelopment organizations, well-respected leadership team and a trustedportfolio of recognized brands, CFR is one of the leading branded genericcompanies in Latin America," said Miles D. White, chairman and chief executiveofficer, Abbott. "This acquisition will significantly enhance and broadenAbbott's Latin American footprint, and is well aligned with our long-termstrategy and commitment to fast-growing markets."Abbott expects the acquisition to add approximately $900 million to its salesin the first full year (2015), with expected double-digit sales growth overthe next several years.CFR Pharmaceuticals, headquartered in Santiago, Chile, participates in 15Latin American markets and has a comprehensive product portfolio that is wellaligned with Abbott's current pharmaceutical therapeutic areas of focus inwomen's health, central nervous system, cardiovascular and respiratorydiseases. The addition of CFR's business will significantly improve Abbott'sposition in several markets, and provide the opportunity to expand eachcompany's portfolio across Latin America. "We are pleased to join with Abbott to enhance CFR's leadership across LatinAmerica," said Alejandro Weinstein, chief executive officer, CFRPharmaceuticals. "CFR and its employees will become part of an organizationmuch like itself, a well-respected company with a long heritage and commitmentto delivering quality health care products that improve people's lives."CFR currently markets more than 1,000 products and has a proven track recordof rapidly developing and bringing new products to market. In addition toleading products and a robust pipeline, the acquisition adds approximately7,000 employees, and R&D and manufacturing facilities in Chile, Colombia, Peruand Argentina.The Latin American Pharmaceutical MarketThe Latin American pharmaceutical market is expected to reach $73 billion insales this year, and is expected to reach $124 billion by 2018, with estimatedannual growth rates of two to three times that of developed markets over thecoming years, according to IMS forecasts.Financial HighlightsUnder terms of the agreement, Abbott will commence a tender offer to purchaseall the outstanding shares of CFR Pharmaceuticals following necessaryregulatory approvals. Abbott plans to fund the transaction with cash on thebalance sheet.Assuming the transaction closes as anticipated by the end of the third quarterof 2014, Abbott would expect to benefit from the year-over-year sales increasein the fourth quarter. The addition of CFR does not impact Abbott's full-year2014 ongoing EPS guidance previously provided.Abbott anticipates this transaction to be accretive to ongoing earnings pershare in 2015 and increasing thereafter, before one-time transaction-relateditems, which will be provided at a later date. The transaction is subject tocustomary closing conditions and regulatory approvals.Barclays advised Abbott on the transaction; Deutsche Bank Securities Inc.advised CFR.