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Abbott: $15 Billion Available From Notes

- By Alberto Abaterusso

Abbott Laboratories (ABT) informs shareholders about the completion of the sale to the public of senior notes for an aggregate principal amount of $15.1 billion, according to a regulatory filing registered by the U.S. Security and Exchange Commission on Nov. 23,


The aggregate amount of $15.1 billion is subdivided in six different series of corporate bonds that have an interest rate ranging between 2.35% and 4.90%. These bonds will become due and will be repaid by Abbott to the bondholders according to the dates shown in the table below.

Source of data: Abbott Labs' Form 8-K report

The money raised by the issuance of the notes will be used by the company to fund the acquisition of St. Jude Medical in a deal valued approximaely $25 billion.

The American company engaged in the global medical device business had total liquidity of $403 million as of the most recent quarter and the total cash per share (mrq) was $1.41. The total debt was $5.77 billion as of Oct. 1, with a total debt-equity ratio of 128.71 versus 29.97 of the industry and 30.88 of the sector.

Once the deal is completed, which is expected by the end of 2016, "Abbott will also assume or refinance St. Jude's (STJ) $5.7 billion in debt" as reported by Bloomberg.com last April. In the meantime the European Commission has released favorable feedback on the Abbott- St. Jude merger as reported by neweurope.eu.


"When it comes to the interests of patients and health care systems, we have to make sure that prices stay competitive, that practitioners have sufficient choice and that promising innovative products are not abandoned by the merging companies. I am glad we have found a solution that allows this takeover to proceed while ensuring that competition is preserved," said Margrethe Vestager, the commissioner in charge of competition policy at the European Commission. (Source:neweurope.eu)



The stock market positively reacted after the news of the European Commission's merger approval. As a matter of fact, Abbott closed at $38.98 per share on Nov. 23, and went up 87 cents, or 2.28%, from the previous trading day, with 9,570,229 shares versus an average volume of 9.19 million shares traded on the stock market over the last three months.

The Standard & Poor's 500 U.S. members headquartered in Minnesota closed at $80.02 per share Wednesday on the New York Stock Exchange with a volume of 2,868,742 shares versus an average volume of 3,378,963 shares traded on the stock market over the last three months. The share price is up $1.12 or plus 1.42% from the previous trading day. St. Jude Medical gained 29.55% on the NYSE and outperformed the S&P 500 with 21.68% year to date.

The book value per share (mrq) is 15.71. St. Jude Medical is trading 5.09 times its book value per share according to the current share price. The company has approximately 285.72 million shares outstanding.

Together with St. Jude Medical, Abbott Laboratories agreed last month 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) for a consideration of approximately $1.12 billion.

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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This article first appeared on GuruFocus.