Market Overview

Morningstar Analyst: Abbott Laboratories' Acquisition Of St. Jude Medical 'Makes A Lot Of Strategic Sense'

Morningstar Analyst: Abbott Laboratories' Acquisition Of St. Jude Medical 'Makes A Lot Of Strategic Sense'

Debbie Wang, an analyst at Morningstar explained during an interview on Bloomberg TV why Abbott Laboratories (NYSE: ABT) acquisition of St. Jude Medical, Inc. (NYSE: STJ) "makes a lot of strategic sense."

Speaking to Bloomberg TV, Wang said that the deal is attractive due to healthcare reform.

"The medical device companies are following a couple of different strategies," she said. "Unfortunately, Abbott was not following either of them – it did not have the breadth of product to be a better and more comprehensive vendor to hospitals."

Related Link: St. Jude Soars 30% After Abbott Announces $25 Billion Acquisition

She added that Abbott also didn't have "the depth of innovation that you need in order to secure reimbursements." Accordingly, it was vital for Abbott to initiate some sort of transformative measure to remain competitive at a time when its competitors were changing themselves.

Wang further suggested that Abbott's business profile was drifting towards becoming "irrelevant."

Wang continued that while only one of Abbott's four divisions sells medical devices with a focus on heart devices. The segment "pairs quite nicely" with St. Jude's heart disease platform.

Finally, the analyst said that she is not overly concerned of any regulatory hurdles towards the acquisition being completed as the product portfolios of the two companies are more complementary than competitive.


Related Articles (ABT + STJ)

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