Abbott Laboratories have stated its intention to sell its eye care business to Johnson & Johnson in a $4.33 billion cash deal. The acquisition is due for completion in the first quarter of 2017. The company wants to focus on its diagnostics and cardiovascular device business.
This part of its business was expanded earlier this year when it entered into two deals. One was $5.8 for diagnostic firm Alere Inc and the other a $25 billion deal for St. Jude Medical Inc who manufactures medical devices.
The Alere acquisition deal was signed in January but has stumbled over claims of wrongdoing by Alere and undisclosed US investigations into billing practices and overseas operations. Alere responded with a lawsuit against Abbott for delaying on antitrust submissions.
Not only that, but allegations have been made that pacemakers and defibrillators manufactured by St. Jude Medical are exhibiting cyber security flaws that could be used by hackers to harm patients.
Abbott purchased its Medical Optics business in 2009, when it acquired Advanced Medical Optics for almost $1.4 billion. AMO is a world leader in Lasik eye laser technology. It’s reported sales for 2015 totalled $1.1 billion. However, the business is viewed as being less of a strategic fit than its other operations. It also has to release cash to pay for the other two acquisitions. Abbott’s long-term debt at the end of June was $6 billion.
Johnson & Johnson want to focus on its eye care business. Abbott Laboratories eye care operation will fit perfectly with the business. It would add cataract surgery and laser refractive surgery to its portfolio along with Abbott’s consumer eye health units. Its vision care business raised $685 revenue in the second quarter of 2016. One of its major products at present is the Acuvue contact lens business.
J%&J shares closed 0.3% down at $118.2 Friday and Abbott Laboratories closed 1.8% up at $41.87.
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