Earlier today Abbott Laboratories announced the acquisition of Minnesota based St. Jude Medical for $25 Billion – which represents a 37% premium to St. Jude’s closing stock price on the day of the announcement. If you’re a shareholder, congrats!!
This transaction was rumored almost over a year ago. It allows both companies to create a leading position in the cardiovascular device market – holding either a #1 or #2 share position in many high growth device markets. And in a position to long-term compete better with companies such as Medtronic and Boston Scientific – as healthcare on a number of fronts is going through continued broad based consolidation.
Similar to the Sherwin Williams / Valspar deal – how did Abbott justify the acquisition? Through an announced $500 Million in synergies by 2020, which includes both sales and operational cost cutting. If you work in general back office or corporate based functions at St. Jude – yes your position is likely to be eliminated.
While Abbot won’t just take the Minnesota employee base and move it, this may impact the Twin Cities indirectly by losing the HQ and cornerstone of a top medical device company. The Twin Cities has developed a solid reputation as a mini medical device super hub in the U.S. – losing the “based in Minnesota” label may dilute that view a bit.
The Twin Cities continues to be, on a relative basis, home to a number of large companies. But in the past two months it has lost the HQ of two sizeable companies. The number of F1000 companies has gone down from 25 to 23. The number of F500 companies down from 15 to 14.
Which company will brace the headlines next? Will Nestle finally buy General Mills?