Abbott Laboratories (ABT, Financial) and St. Jude Medical Inc. (STJ, Financial) agreed to sell St. Jude Medical's Angio-Seal and Femoseal, vascular closure products, and Abbott's Vado Steerable Sheath, a heart catheter, to Terumo Corp (TSE:4543, Financial) for a consideration of approximately $1.12 billion.
Abbott declared the 371st consecutive quarterly dividend of 26 cents per share on Sept. 15. The current dividend yield is 2.60%. The company is a long-term dividend payer and has increased its dividend payout for 44 consecutive years.
Abbott's vascular closure products will not be included in this transaction. They are Perclose ProGlide Suture-Mediated Closure System, StarClose SE Vascular Closure System and Prostar XL Percutaneous Vascular Surgical System.
The transaction is conditional to the antitrust regulatory approvals and successful completion of the acquisition of St. Jude Medical by Abbott Laboratories, whose closing is expected by the end of the year and being “accretive to Abbott's adjusted earnings per share in the first full year after closing and increasing thereafter,” as reported by Abbott in a press release.
The combined business that will be formed following Abbott's acquisition of St. Jude Medical will have positive consequences for both shareholders and heart patients: the combined business will have a leading position in the cardiovascular market and contribute more effectively to enhance patients' quality of life and reduce costs.
The stock market positively reacted after the news of the agreement between Abbott, St. Jude Medical and Terumo. As a matter of fact, Abbott closed at $41.17 per share on Oct. 18, and went up 35 cents, or 0.87%, from the previous trading day, with 9.6 million shares traded on the New York Stock Exchange. This data is roughly in line with the average daily volume of Abbott shares traded over the last month, contrary to when Abbott tumbled on St. Jude Medical's news about battery issues with implanted defibrillators. Over the course of that day, 23.85 million shares were traded versus an average daily volume over the prior month of 7,974,549 shares.
At the moment, Abbott is trading at around $40.58 per share and is up 57 cents (or +1.42%) from the previous trading day, when 19,300,013 shares were traded following Abbott's release of third quarter 2016 results.
Yesterday, the U.S.-based international health care company reported a revenue of $5.3 billion (+2.9% year-over-year), beating analysts' expectations by $10 million and reported adjusted diluted earnings-per-share from continuing operations of 59 cents (+9.3% year-over-year), beating analysts' expectations by one cent.
Abbott is a member of the S&P 500 Dividend Aristocrats Index.
Disclosure: I have no positions in any stock mentioned in this article.
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