A Medical Device Daily

In an $8.13 billion cash deal, disclosed late yesterday, General Electric (Little Chalfont, UK) and Abbott Laboratories (Abbott Park, Illinois) said they have entered into a definitive agreement for GE to buy Abbott’s primary in vitro diagnostics businesses and Abbott’s Point-of-Care diagnostics business (formerly known as i-STAT).

Abbott’s Molecular Diagnostics and Diabetes Care businesses are not part of the transaction and will remain part of Abbott, the companies said.

GE Healthcare said that the addition of two of Abbott’s core laboratory diagnostics businesses will broaden its diagnostic offerings.

The company also noted that Abbott’s in vitro diagnostics complement GE’s existing positions in in vivo diagnostic imaging systems (in vivo imaging uses X-ray, magnetic resonance, ultrasound or other imaging procedures to look at what is in the body to diagnose disease), as well as its molecular imaging, information technology, and patient monitoring capabilities across the complete healthcare continuum.

“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,” Jeffrey Immelt, GE CEO and chairman, said in a company statement. “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 both companies and is targeted to close in the first half of this year.

“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,” said Miles White, Abbott’s CEO and chairman, in a company statement. “As part of GE, Abbott’s core diagnostics and point-of-care businesses will be powerfully positioned to sustain and extend their market success.”

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, the company said.

Abbott’s in vitro diagnostics business, including Point-of-Care, is expected to generate net sales of about $2.7 billion in 2006.

Abbott bills its in vitro diagnostics business as a global leader with a tradition of developing first-of-a-kind products that have helped create the modern diagnostics industry. Abbott Point-of-Care makes 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 said that the transaction is expected to be neutral to its earnings-per-share in 2007 before specified items and accretive thereafter.

GE said the transaction would be accretive to earnings.

“Over the last five 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,” said Joe Hogan, president/CEO of GE Healthcare. “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.”