European Commission clears Abbott’s $25 billion acquisition of St. Jude Medical Inc.

The merger in this sector only goes to underline the pressures felt by medical equipment manufacturers to increase the depth and width of their product basket and make them readily accessible to hospitals.

According to source familiar with the matter at hand, antitrust regulators in the European Union have given the go ahead for Abbott Laboratories’ $25 billion acquisition of St. Jude Medical Inc.

When requested to comments, a spokesman for the European Commission declined comment.

While Abbott had no immediate comment St. Jude officials could not be reached for comment.

In October, Miles White, Abbott’s CEO had stated that he hoped the company’s bid for St. Jude would come through by the year end.

Both companies have offered concessions to address concerns raised by the European Commission on Oct. 31. These details were not disclosed.

Two weeks before October 31, they had announced the sale of some of their medical devices worth nearly $1.12 billion to a Japanese company Terumo Corp, in what is likely to be a concession for their merger to get through.

Incidentally, St. Jude is currently facing multiple issues, including an investigation by the U.S. FDA over claims that its heart devices are defective and are vulnerable to cyber hacks which could lead to serious fatalities.

With the news of its flaws related to the cyber security of its devices leaking out, St. Jude sued MedSec Holdings, a cyber research firm and short-seller Muddy Waters.

MedSec had issued a security bulletin related to the alleged flaws in the implanted devices which were vulnerable to cyber-attacks which could potentially drain their batteries to fatal levels.

On October 19, when Abbott reported a stronger than expected earnings White praised the manner in which St. Jude handled Muddy Waters’ allegations.

Last month, St. Jude had stated it will be recalling some of its 400,000 implanted heart devices due to the risk of premature battery depletion, a condition which has been linked to two deaths in Europe.

With the European Commission clearing the acquisition, shares of both companies reported moderate gains and rose by 1.6%.

The merger in the medical equipment sector only goes to underscore the pressure felt by medical equipment manufacturers to scale up their operations and offer a wider range of products to hospitals.

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Categories: HR & Organization, Regulations & Legal, Strategy

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