WEBVTT - Bloomberg's Damouni on Abbott's 'Transformational' Deal (Audio)

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<v Speaker 1>This is taking stock with Kathleen Hayes and grim Box

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<v Speaker 1>on Bloomberg Radio, heart valves, pacemakers, catheters. Did they go

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<v Speaker 1>together with pharmaceuticals, nutritional items and contact lenses? Well they

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<v Speaker 1>do now because Abbott Laboratories has agreed to buy the

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<v Speaker 1>heart device makers St Jude Medical for five billion dollars.

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<v Speaker 1>Here to tell us more about the sector of the

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<v Speaker 1>world economy, Sasha domuni are Bloomberg Healthcare report of twenty

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<v Speaker 1>five billion dollars. You know that that used to be

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<v Speaker 1>considered a lot of money. Sasha tell us why is

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<v Speaker 1>this such a good and important deal for Abbott Labs.

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<v Speaker 1>It's a transformational deal for Abbott And if you think

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<v Speaker 1>about today. In fact, today has been very exciting on

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<v Speaker 1>the M and A front, and healthcare in particular. It's

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<v Speaker 1>been a forty billion dollar M and A day. So

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<v Speaker 1>Abbott obviously has been the biggest contributor to the day. Uh,

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<v Speaker 1>it was a good time for Abbott to come in

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<v Speaker 1>for this acquisition St Jude. I've been covering healthcare for

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<v Speaker 1>thirteen fourteen years. St Jude has been a perennial target

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<v Speaker 1>every single year to the point where you think you

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<v Speaker 1>know what this company is never going to be acquired,

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<v Speaker 1>so they get acquired. The valuation if you if you

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<v Speaker 1>look at where they're trading at right now, around seventy

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<v Speaker 1>nine per share, the valuation is in line to what

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<v Speaker 1>it was in July last year. So it would probably

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<v Speaker 1>seem that the deals are happening because the valuations are

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<v Speaker 1>down in healthcare and that's biotech, medical devices, life science tools,

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<v Speaker 1>all those companies. So we're starting to see executives think,

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<v Speaker 1>you know what, I don't think we're going to get

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<v Speaker 1>back to the July level. So this valuation is the

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<v Speaker 1>new norm. So billion today, it could have been thirty

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<v Speaker 1>to thirty five billion last year in a deal. And

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<v Speaker 1>the share price is down a little bit today, yes,

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<v Speaker 1>so if you think about the acquisition, the shares are

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<v Speaker 1>If you think about Abbott, the shares are down about

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<v Speaker 1>eight point eight percent, and there's been some scrutiny around

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<v Speaker 1>uh the deal in terms of St. Jude's sluggish grow

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<v Speaker 1>So it's been sluggish and in recent revenue growth performance,

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<v Speaker 1>they've been concerns about the path to top line re acceleration.

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<v Speaker 1>And then obviously Abbott getting in on Cardiac where the

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<v Speaker 1>management that's been pretty flat so that's kind of putting

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<v Speaker 1>a few people off. They're still going to do the

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<v Speaker 1>A Layer deal. It's it seems so, I mean, they've

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<v Speaker 1>reassured that five I mean, as I said, billion dollars

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<v Speaker 1>used to be a lot of money. I guess five

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<v Speaker 1>point eight billion doesn't count for all they can do exactly.

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<v Speaker 1>They they've said they're committed to the deal, even though

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<v Speaker 1>obviously the DJ is still poking around there. Obviously going

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<v Speaker 1>back to the sales how how A Layer conducted itself

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<v Speaker 1>on the sales front. So there they seem very much

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<v Speaker 1>committed to that. So way in on Santa fees a

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<v Speaker 1>big deal and uh more more billions of dollars offered

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<v Speaker 1>on the table. This is an interesting situation because Metivation

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<v Speaker 1>is partnered with Estellus on Astandi, which is their top

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<v Speaker 1>selling drug, their top selling prodect cancer drug. And people

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<v Speaker 1>are thinking, well, hey, you know, there's a clause that

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<v Speaker 1>says if if there's an unsolicited bid on Metivation, then

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<v Speaker 1>then a Stellist stand still goes away. So does a

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<v Speaker 1>Stellis come in It would make sense for their pipeline.

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<v Speaker 1>People are also asking, come on, you know, this bid

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<v Speaker 1>is seen as quite low relative to what metivations valuation

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<v Speaker 1>should be. So there may be other people, other parties

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<v Speaker 1>interested here, So no, if you no doubt, may go

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<v Speaker 1>up into the sixty range on their potential offer, but

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<v Speaker 1>they started at a range that they had probably put

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<v Speaker 1>down about two weeks ago when they approached metivation. Now

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<v Speaker 1>they just made this public um, this offer public today.

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<v Speaker 1>Sasha Domoni, thank you so very much. Our first word

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<v Speaker 1>healthcare reporter here at Bloomberg News