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Bloomberg's Damouni on Abbott's 'Transformational' Deal (Audio) · Bloomberg Intelligence

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  Speaker 1: This is taking stock with Kathleen Hayes and grim Box
• 0:04
  Speaker 1: on Bloomberg Radio, heart valves, pacemakers, catheters. Did they go
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  Speaker 1: together with pharmaceuticals, nutritional items and contact lenses? Well they
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  Speaker 1: do now because Abbott Laboratories has agreed to buy the
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  Speaker 1: heart device makers St Jude Medical for five billion dollars.
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  Speaker 1: Here to tell us more about the sector of the
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  Speaker 1: world economy, Sasha domuni are Bloomberg Healthcare report of twenty
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  Speaker 1: five billion dollars. You know that that used to be
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  Speaker 1: considered a lot of money. Sasha tell us why is
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  Speaker 1: this such a good and important deal for Abbott Labs.
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  Speaker 1: It's a transformational deal for Abbott And if you think
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  Speaker 1: about today. In fact, today has been very exciting on
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  Speaker 1: the M and A front, and healthcare in particular. It's
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  Speaker 1: been a forty billion dollar M and A day. So
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  Speaker 1: Abbott obviously has been the biggest contributor to the day. Uh,
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  Speaker 1: it was a good time for Abbott to come in
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  Speaker 1: for this acquisition St Jude. I've been covering healthcare for
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  Speaker 1: thirteen fourteen years. St Jude has been a perennial target
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  Speaker 1: every single year to the point where you think you
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  Speaker 1: know what this company is never going to be acquired,
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  Speaker 1: so they get acquired. The valuation if you if you
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  Speaker 1: look at where they're trading at right now, around seventy
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  Speaker 1: nine per share, the valuation is in line to what
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  Speaker 1: it was in July last year. So it would probably
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  Speaker 1: seem that the deals are happening because the valuations are
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  Speaker 1: down in healthcare and that's biotech, medical devices, life science tools,
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  Speaker 1: all those companies. So we're starting to see executives think,
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  Speaker 1: you know what, I don't think we're going to get
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  Speaker 1: back to the July level. So this valuation is the
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  Speaker 1: new norm. So billion today, it could have been thirty
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  Speaker 1: to thirty five billion last year in a deal. And
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  Speaker 1: the share price is down a little bit today, yes,
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  Speaker 1: so if you think about the acquisition, the shares are
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  Speaker 1: If you think about Abbott, the shares are down about
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  Speaker 1: eight point eight percent, and there's been some scrutiny around
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  Speaker 1: uh the deal in terms of St. Jude's sluggish grow
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  Speaker 1: So it's been sluggish and in recent revenue growth performance,
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  Speaker 1: they've been concerns about the path to top line re acceleration.
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  Speaker 1: And then obviously Abbott getting in on Cardiac where the
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  Speaker 1: management that's been pretty flat so that's kind of putting
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  Speaker 1: a few people off. They're still going to do the
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  Speaker 1: A Layer deal. It's it seems so, I mean, they've
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  Speaker 1: reassured that five I mean, as I said, billion dollars
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  Speaker 1: used to be a lot of money. I guess five
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  Speaker 1: point eight billion doesn't count for all they can do exactly.
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  Speaker 1: They they've said they're committed to the deal, even though
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  Speaker 1: obviously the DJ is still poking around there. Obviously going
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  Speaker 1: back to the sales how how A Layer conducted itself
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  Speaker 1: on the sales front. So there they seem very much
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  Speaker 1: committed to that. So way in on Santa fees a
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  Speaker 1: big deal and uh more more billions of dollars offered
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  Speaker 1: on the table. This is an interesting situation because Metivation
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  Speaker 1: is partnered with Estellus on Astandi, which is their top
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  Speaker 1: selling drug, their top selling prodect cancer drug. And people
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  Speaker 1: are thinking, well, hey, you know, there's a clause that
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  Speaker 1: says if if there's an unsolicited bid on Metivation, then
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  Speaker 1: then a Stellist stand still goes away. So does a
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  Speaker 1: Stellis come in It would make sense for their pipeline.
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  Speaker 1: People are also asking, come on, you know, this bid
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  Speaker 1: is seen as quite low relative to what metivations valuation
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  Speaker 1: should be. So there may be other people, other parties
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  Speaker 1: interested here, So no, if you no doubt, may go
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  Speaker 1: up into the sixty range on their potential offer, but
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  Speaker 1: they started at a range that they had probably put
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  Speaker 1: down about two weeks ago when they approached metivation. Now
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  Speaker 1: they just made this public um, this offer public today.
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  Speaker 1: Sasha Domoni, thank you so very much. Our first word
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  Speaker 1: healthcare reporter here at Bloomberg News