By Omar Ford, Staff Writer
The U.S. Federal Trade Commission (FTC) has approved Abbott Laboratories' $25 billion acquisition of St. Jude Medical Inc. The deal was green lit after the FTC accepted a proposal for the divestiture of St. Jude's vascular closure device business and Abbott's steerable sheath business to Terumo Corp.
Abbott first made a bid to acquire St. Paul, Minn.-based St. Jude earlier this year. (See Medical Device Daily, April 29, 2016.) The proposed deal drew concern from federal antitrust regulators, who said the combined company would control a significant percentage of the vascular closure device market. The FTC said that St. Jude has dominated the steerable sheath market and its only real competitor was the company acquiring it – Abbott.
"We continue to work to obtain final regulatory approvals and anticipate closing before the end of the year or shortly thereafter," Abbott spokeswoman Elissa Maurer told Medical Device Daily.
In October, the companies struck a deal to sell the businesses to Tokyo-based Terumo for $1.12 billion. European antitrust enforcers have already signed off on the proposed merger. (See Medical Device Daily, Oct. 19, 2016.)
The deal with Terumo includes St. Jude's Angio-Seal and Femoseal vascular closure products and Abbott's Vado steerable sheath. Terumo would significantly benefit because it doesn't have vascular closure devices or steerable sheaths in its product portfolio.
Over the past few years, Terumo has been expanding its offerings through acquisitions. Nearly four years ago, the company acquired blood transfusion specialist Caridianbct for $2.62 billion. More recently, Terumo showed an interest in strengthening its position in the neurovascular market when it proposed acquiring Aliso Viejo, Calif.-based Sequent Medical Inc. for $380 million. (See Medical Device Daily, June 15, 2016.)
Abbott isn't out of the woods with the FTC yet. The company will have to notify the agency if it decides to follow through on any future acquisitions that could violate antitrust laws. That could be a real possibility if Abbott decides to follow up on its right to acquire Advanced Cardiac Therapeutics Inc. (ACT). The Santa Clara, Calif.-based company develops lesion-assessing ablation catheters. St. Jude is one of the few companies that develops these types of devices. (See Medical Device Daily, Oct. 30, 2014.)
"After the acquisition of St. Jude, if Abbott acquired lesion-assessing ablation catheter assets from ACT, it could eliminate additional competition that would result from an independent ACT," the FTC said.
Abbott isn't the first med-tech company that has divested businesses to comply with FTC mandates. In 2014 Covidien sold its development-stage drug-coated balloon to Colorado Springs-based Spectranetics Corp. for $30 million before being acquired by Medtronic plc for $43 billion. (See Medical Device Daily, Nov. 4, 2014.)
The device will eventually compete with Dublin-based Medtronic plc's Inpact Admiral drug-coated balloon, which the FDA approved in longer, 150 mm lengths, which is expected to provide more treatment options for long lesions in patients with peripheral artery disease.
And Zimmer, now Zimmer Biomet Inc., sold its Unicompartmental High Flex Knee to London-based Smith & Nephew plc immediately after closure of its $14 billion acquisition of Biomet. The Warsaw, Ind.-based company also divested a total elbow implant and bone cement, as well as some other assets in European markets.
If anything 2016 has been a time of change for the Abbott Park, Ill.-based company. In September, the company sold Abbott Medical Optics Inc. to New Brunswick, N.J.-based Johnson & Johnson (J&J) for about $4.33 billion in cash. (See Medical Device Daily, Sept. 22, 2016.)
The acquisition was a clear sign that Abbott was focused on moving closer toward its cardiovascular device and diagnostics offerings.
However, Abbott took a step back on one acquisition that would significantly boost its diagnostic product offerings. The company is in the process of trying to back out of its deal with $5.8 billion acquisition of diagnostics-maker Alere Inc. Earlier this month, Abbott cited a series of what it called "damaging business developments" that the Waltham, Mass.-based company has suffered since the agreement was signed in late January. Alere lost its billing privileges for a substantial division, has suffered a permanent recall of an important product platform, has been through multiple government subpoenas – including two criminal subpoenas – delayed filing its annual 10k report by five months, and admitted to internal control failures requiring restatement of its 2013 to 2015 financials. (See Medical Device Daily, Dec. 8, 2016.)
St. Jude Medical has been embroiled in controversy of its own since the merger proposal was made public.
In August short-seller Muddy Waters and research firm Medsec Holdings said that St. Jude's heart devices were susceptible to cyber attacks. Analysts have sided with St. Jude on the issue, advising that the stock's short-term sell off based on the Muddy Waters Capital LLC report was unwarranted. St. Jude Medical not only denied the allegations but also ended up suing Medsec Holdings and Muddy Waters. (See Medical Device Daily, Aug. 30, 2016.)