Here are five things to know about the sale of St. Jude Medical to Abbott Laboratories:
1) It is part of a bigger makeover of the health care industry.
You have probably also noticed insurance companies coming together, pharmacy chains merge and hospital groups realign over the past year or two. The American health care industry is in trying to weed out costs and companies are trying to broaden their mix of products and services because scale helps withstand the pressure on margins.
2) Abbott will make money from St. Jude right away -- and look for cost savings.
Sometimes in big transactions, the costs of a deal get in the way of its profitability. But Abbott said it expects St. Jude to begin contributing to its bottom line immediately. It expects 21 cents per share of accretion in 2017 and 29 cents in 2018. Abbott says it will look to cut out $500 million in pre-tax costs from the combined companies. That will happen by combining sales teams and other operations, likely yielding to job cuts at one or both existing companies.
3) The deal is focused on the business of caring for people with heart problems.
St. Jude started as a maker of artificial heart valves and offers a full line of heart-related devices, such as pacemakers. Abbott is a leading maker of coronary intervention and transcatheter mitral repair products. The two companies cardiovascular products combine for nearly $9 billion in annual sales around the world.
4) Demographics, particularly in the U.S., show more people could be having heart problems in coming years.
It's the combination of the aging of the Baby Boomers and problematic diet and exercise habits of Americans that lead the two companies to make a stunning claim: by 2030, 40 percent of American adults are expected to have one or more forms of cardiovascular disease.
5) Abbott is in the middle of another deal that has turned somewhat messy.
Its offer to buy Alere, a maker of medical testing equipment, in February for around $6 billion has become complicated by a Department of Justice investigation into Alere's foreign operations. Abbott's executives made no comment about the deal's progress during an earnings call last week. They said today they expect to close the St. Jude Medical acquisition in the last three months of this year.