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Abbott is a Sleeping Giant on the M&A Front

Abbott is a Sleeping Giant on the M&A Front
Although Abbott Laboratories had no deal activity in the first half of the year, CEO Miles White says the cash-rich company sees lots of attractive opportunities. 

Jamie Hartford

So far, it has been a quiet year on the M&A front for Abbott Laboratories. Last year saw the company snap up electrophysiology device maker Topera Inc. as well as a few companies in the pharma space. But this year, nothing.

As analysts on the company’s Q2 2015 earnings call noted, Abbott has plenty of cash. So what gives?

According to chairman and CEO Miles D. White, the company is simply biding its time.

“…While we've got what I think is a fairly attractive menu of opportunities for us from an M&A standpoint, you just haven't seen us act on it,” White said, according to a Seeking Alpha transcript.

White noted that valuations are high right now but added that Abbott has the ability “to fund a fair amount of M&A.” A lot of its cash is held outside the United States, but White said the company isn’t holding out for Congress to attach a $2-trillion tax holiday on previously untaxed overseas earnings to a highway funding bill.

“Do I think Congress is going to do anything with tax policy before the end of the year? I give you a resounding, ‘No,’” White said.

The U.S. medical device tax isn’t deterring it from making deals with U.S. companies either.

Abbott, it seems, is just taking it slow.

When the company does finally make a move, it’s possible it could come in the vascular space. As Wells Fargo Securities analyst Larry Biegelsen pointed out, Abbott’s vascular business doesn’t have the breadth of Medtronic's and Boston Scientific's, its rivals in the space. White agreed, saying he specifically thinks the company needs to diversify in the realm of structural heart.

He also explained that Abbott has established a team to incubate ventures, adding that “there’s a lot of activity there right now.”

“We have a clear focus on expanding and broadening the whole device business,” White said. “It's actually going really well. We're just not in a position to tell you much about it yet, and it ranges from equity investments to outright ownership or assembly of businesses there.”

In other words, we can likely expect to see Abbott make some deals in the medtech space before long.

Last year saw a wave of megamergers in medtech. Keep track of who bought who with our comprehensive list of medtech M&As from 2014.

Jamie Hartford is editor-in-chief of MD+DI. Reach her at [email protected] or on Twitter @MedTechJamie.



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