St. Jude seeks shareholder approval for Abbott merger

St. Jude Medical (NYSE:STJ) is reaching out to shareholders to approve its proposed $25 billion merger with Abbott (NYSE:ABT), according to an SEC filing posted today.

The Memphis, Tenn.-based company said the deal will put $46.75 cash in the hands of each stock holder for every share they hold, as well as 0.87 shares of Abbott for each share of St. Jude. The company said no fractional shares will be issued, and that any fractional shares will be paid in cash.

St. Jude said its board had already unanimously approved the merger, and urged its shareholders to join them and push the sale forward, according to the SEC filing.

In July, St. Jude & Abbott said that U.S. anti-trust regulators wanted more information about their proposed $25 billion merger. The Federal Trade Commission’s requests mean that the waiting period on the deal was extended by 30 days “unless the period is extended voluntarily by the parties or terminated sooner by the FTC,” the companies said in separate but identical securities filings.

The $85-per-share deal, announced in April, consists of $46.75 in cash and 0.8708 Abbott shares; at Abbott’s 5-day volume weighted average share price of $43.93 as of April 26, the buyout is worth about $25 billion. That’s a 37% premium on the closing price of $61.97 for St. Jude shares the day before the acquisition was revealed.

The companies said the union will create a “best-in-class” competitor in nearly all segments of the cardiovascular market with the 1st or 2nd position “across large and high-growth cardiovascular device markets” with combined annual sales of about $8.7 billion. The deal also calls for Abbott to assume or refinance St. Jude’s $5.7 billion in net debt.

Abbott said it expects the transaction to add 21¢ to adjusted earnings per share in 2017 and 29¢ the next year. The Chicago-area healthcare giant has another large buyout pending, the nearly $6 billion acquisition of diagnostics firm Alere (NYSE:ALR). Abbott has said that it anticipates financing the purchases with outside financing. The Alere deal which drew scrutiny after White appeared to throw some shade, shareholders sued to block the deal and the U.S. Justice Dept. opened a probe; Abbott itself is reportedly auditing the diagnostics company’s book.

For St. Jude, Abbott said it expects to float $3 billion worth of common stock in a secondary offering. During a conference call in April, analysts questioned the cost of the deal versus its financial benefits, and how it would affect Abbott’s purchase of Alere.

White defended the St. Jude deal, saying it would add to earnings per share in the 1st full year after it closes. Asked about the timing of the deal, after Abbott shot down rumors that the companies were in talks last summer, White said the talks did not begin until late 2015.

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