Abbott to Buy Blood Monitor Firm
Abbott Laboratories Inc. agreed Tuesday to buy Alameda-based blood-monitoring equipment maker TheraSense Inc. for $1.2 billion in cash to broaden its offerings in the burgeoning diabetes treatment market.
Abbott, based in Abbott Park, Ill., would pay $27 a share for TheraSense, or 33% more than the company’s closing price Monday. TheraSense’s shares hit a 52-week high of $26.75 before closing at $26.64, up $6.34, on Tuesday on Nasdaq.
TheraSense, founded in 1996, has 456 employees and has been marketing blood glucose self-monitoring systems since June 2000. The company sells a variety of devices that require smaller amounts of blood for an accurate reading than some competing products.
Upon completing its purchase of TheraSense, Abbott would become the No. 3 maker of devices that allow diabetics to monitor blood-sugar levels, behind Roche Holding and Johnson & Johnson, said spokeswoman Rhonda Luniak.
Al Kildani, a San Francisco-based analyst for C.E. Unterberg, Towbin, said that Abbott was losing ground to rivals in the blood glucose-monitoring market and that TheraSense was bound to run into more competition from bigger players.
The deal is “a nice fit for the two companies,” Kildani said.
TheraSense Chief Executive W. Mark Lortz said the deal would give TheraSense products “an expanded global reach” and “significant opportunities in research and development.”
The deal must be approved by shareholders and federal regulators. Company executives said they hoped it could be completed by the second quarter.
Analysts said the fiercely competitive $4.5-billion market for diabetes-monitoring equipment would continue to grow. Diabetes affects 150 million people worldwide.
Paul Abel, portfolio manager for New York-based Kinetics Medical Fund, said the deal made sense for Abbott, if only to prevent rivals from buying TheraSense.
“They are acquiring the potential competition,” said Abel, whose firm owns about 60,000 shares of Abbott stock.
TheraSense had its first profitable performance in the third quarter, with a net income of $2.7 million, or 6 cents a share, reversing a loss of $9.3 million, or 23 cents a share, a year earlier. TheraSense’s sales rose 49% to $58.2 million in the third quarter, up from $39 million a year earlier.
Analyst Kildani said Abbott also could pick up additional sales from a product TheraSense is developing that would use a small sensor placed under the skin to provide continuous blood glucose monitoring.
The wireless system would send data once a minute to a pocket device, allowing patients to check their glucose levels for three days without having to draw blood.
TheraSense is seeking federal approval for the product, called Freestyle Navigator.
Abbott shares rose 24 cents to $44.43 on the New York Stock Exchange.
Bloomberg News was used in compiling this report.
