EFN

On Monday, Abbott Laboratories or ABT, a healthcare products company, announced that it agreed to purchase Advanced Medical Optics (AMO) for approximately $1.36 billion plus the outstanding debt of $57.1 million that AMO reported in September of 2008. Abbott hopes to increase the company in the market for products caring for eyes and in laser vision equipment.

Miles D. White who is a chairman and chief executive for Abbott stated that AMO is very well established in the medical devices section and was the chief of production. By acquiring Advanced Medical, Abbott will be an improved and stronger company and will grow as a leader in the multi-billion dollar medical device industry.

AMO is based in Santa Ana, California. It provides eye care in the LASIK, cataract surgery, and eye care products areas.

According to the deal, Abbott will buy all of the outstanding shares of AMO stocks at $22.00 a share by January 26. The price is over two times the price of $8.85, that they were on Friday, but it is almost at the price the stock was trading at four months ago. The shares of AMO fell almost 90% in September and October due to the economic recession damaging the section of laser-vision correction. Advanced Medical was the chief producer of laser-vision correction equipment.

AMO was still trying to improve and reorganize after a contact lens solution was recalled in 2007.

Both Abbott and AMO Boards have supported the transaction. The contract is expected to close within the next four months, which is anticipated by Abbott and AMO. The purchase will most likely not have a significant effect on 2009’s earnings. Abbott said that the purchase would increase company profits in 2010.

Abbott expects the acquisition to increase long-term growth of the company with more than $1 billion in yearly sales.
The chairman and CEO of AMO, Jim Mazzo, will remain as president with Abbott.

John Capek, who is the Executive Vice President of Medical Devices for Abbott, said the Abbot would become the chief producer in vision Worldwide. Due to an aging population around the World, the vision business is set up for longstanding development with the help of LASIK and other refractive surgery technologies.

Since AMO is very successful at treating cataracts, an issue related to age, Abbott foresees AMO’s sales steadily increasing in this market.

Since the purchase, the cost of shares of Advanced Medical rose to $21.61, near the purchase price, on Monday. The shares were on the rise leading up to the agreement. However, Abbott’s shares decreased a little on Monday and were down 48 cents to $50.69.