Abbott said on Tuesday the deal is an important step toward completion of the St. Jude acquisition, which is scheduled to close by the year-end.
The deal is subject to the successful completion of Abbott’s acquisition of St. Jude and other approvals.
The divestiture was a nice win for the companies as it signaled that the deal remained on track to close before the year-end and the price seems “extremely lucrative,” Canaccord Genuity analysts wrote in a client note.
St. Jude’s (STJ) shares rose 1.93%, their biggest intraday percentage jump since the deal with Abbott was announced in April, to $79.16. Abbott’s (ABT) shares gained about 1% to $40.96.
St. Jude has been under pressure after short-seller Muddy Waters and research firm MedSec Holdings alleged in August that the company’s heart devices were riddled with defects that make them vulnerable to cyber hacks. St. Jude has denied the allegations and sued both companies.
The company said last week it would recall some of its 400,000 implanted heart devices due to risk of premature battery depletion, a condition linked to two deaths in Europe.
The all-cash transaction will include St. Jude Medical’s Angio-Seal and Femoseal vascular closure products and Abbott’s Vado Steerable Sheath, the companies said on Tuesday.
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Abbott said it would retain its vascular closure products.
Abbott has been divesting to focus on its cardiovascular devices and diagnostics business, selling its medical optics division to Johnson & Johnson (JNJ) for $4.3 billion last month.