Abbott buys Solvay drugs unit for $6.6 billion

AMSTERDAM/BRUSSELS: Abbott Laboratories said it would buy the drugs unit of Solvay in a e4.5 billion ($6.6 billion) deal giving Abbott full control of its Belgian development partner's cholesterol treatments and exposure to emerging markets. The deal disappointed Solvay investors who had been looking for a higher price and Solvay's shares fell.

"In anticipation of future market needs, we are ensuring we have the technologies, products, infrastructure and reach," Abbott chief executive Miles White said in a statement.

Abbott, which will finance the deal with cash, said the deal will add $0.10 to ongoing earnings per share in 2010, doubling to more than $0.20 by 2012 and increasing thereafter, all before one-off transaction items expected to occur in 2010-2012.

The deal is the latest in an acquisition spree by Abbott which this month bought medical device company Evalve Inc for $410 million and eye treatment firm Visiogen Inc for $400 million.

JP Morgan analysts said the operating profit margin of Solvay's drug unit could be clearly improved under Abbott's ownership, adding that synergy potential could be meaningful.

But it added that while significantly accretive to Abbott's bottom-line, the deal will dilute its top-line sales growth.

Abbott, which co-markets with development partner Solvay cholesterol treatments TriLipix and Tricor, said the deal will add more than $3 billion in annual sales, the majority outside the United States and that Solvay has significant presence in key high-growth emerging markets, including Eastern Europe and Asia.