Federal antitrust regulators are closely scrutinizing the proposed $25 billion tie-up of local medical device-maker St. Jude Medical and its much larger acquirer, Chicago-based health care products maker Abbott Laboratories.
After market-close Tuesday, the companies alerted investors that they had received a “second request” for information about their proposed deal from the Federal Trade Commission, which regulates anticompetitive mergers and acquisitions.
Although such investigations have the potential to delay deals — or in extreme cases, derail them — Abbott and St. Jude Medical said in e-mails that the companies continue to work toward closing their deal by the end of the year, as previously announced.
“We have received a request for additional information from the Federal Trade Commission regarding our pending acquisition by Abbott, and are currently reviewing it,” as St. Jude Medical spokeswoman wrote Tuesday night.
Antitrust officials are required to analyze most mergers and acqusitions with deal prices higher than $78 million for potential anticompetitive effects — for example, if the merger would eliminate one of the two suppliers of a particular good or service.
The FTC’s website says the “vast majority” of deals are approved after the first preliminary review.
A second request for information, like what Abbott and St. Jude received this week, happens in fewer than 5 percent of cases, according to Minneapolis antitrust lawyer Todd A. Wind.
“A second request here might indicate that the FTC wants to take a close look at whether the transaction will substantially lessen competition in a relevant market,” Wind said via e-mail. “It means that the parties cannot close the transaction until 30 days after they certify substantial compliance with the subpoena and request for data.”
Stock analysts and company officials have said St. Jude’s advanced devices for treatment of heart failure, atrial fibrillation and irregular heart beats will complement, but likely not overlap, Abbott’s strong portfolio of devices for coronary intervention and repair of the heart’s mitral valve. The goal is to create a single company with strong positions in large, high-growth cardiovascular businesses.
In 2014, medical technology makers Medtronic and Covidien received a second request for information from the FTC shortly after announcing that Medtronic would acquire Covidien in a stock-and-cash deal that came to be valued at $49.9 billion.
That deal closed on time in early 2015 after the companies agreed to divest a specific medical device — the Stellarex drug coated angioplasty balloon, which had been owned by Covidien. Medtronic had been pursuing government approval for its own drug coated balloon at the time, called the In.Pact Admiral, so the companies chose to sell Stellarex to Colorado-based Spectranetics.
St. Jude Medical shares closed at $80.45, off 43 cents; Abbott share were off 24 cents, to $41.97.