Healthcare giant Johnson & Johnson announced Friday that it would buy an Abbott Laboratories eye health subsidiary, dramatically expanding the company's vision care offerings.
J&J will acquire Abbott Medical Optics for $4.33 billion, adding cataract surgery equipment, laser eyesight correction devices and consumer eye products to its existing vision care business of Acuvue contact lenses. Abbott Medical Optics reported $1.1 billion in sales in 2015.
The transaction is expected to close in the first quarter of 2017, and will immediately be accretive to J&J's earnings, albeit modestly, according to the company. The deal is still subject to regulatory approval and customary closing conditions.
"Eye health is one of the largest, fastest growing and most underserved segments in health care today," said Ashley McEvoy, a J&J group chairman responsible for its vision care companies. She said the acquisition will broaden J&J's leadership position in vision care.
J&J and its subsidiaries make a wide variety of consumer health products, prescription drugs and medical devices.
Abbott's consumer eye products include over-the-counter dry-eye drops and various solutions used to clean and disinfect contact lenses. J&J's entrance into the cataract surgery business through this acquisition allows it to gain access to one of the most commonly performed procedures in the U.S.
Abbott CEO Miles White said his Abbott Park, Ill-based company has been refining its business to focus on forging leadership positions in cardiovascular devices and expanding its diagnostics equipment business. Its recently-launched cardiovascular products include the MitraClip and the Absorb stent, which dissolves from the artery after about three years.
"Our vision care business will be well-positioned for continued success and advancement with Johnson & Johnson, and I'd like to thank our employees for building a successful business,” White said.
Abbott said it doesn't expect the transaction to affect its overall earnings targets, in part because they don't include expected gains or costs related to the transaction.
J&J's stock was down slightly at $118.25 per share immediately following the news. Abbott was up nearly 2% at $41.87 per share.
