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GE to pay $8 billion for Abbott diagnostic units

January 19, 2007|From the Associated Press

HARTFORD, CONN. — General Electric Co. will acquire part of Abbott Laboratory Inc.'s diagnostics business for $8.13 billion in cash, the two companies announced Thursday.

The addition of Abbott's primary in vitro diagnostics and point-of-care diagnostics businesses will broaden GE's $16-billion healthcare business, which has moved into healthcare information technology and molecular diagnostics in the last few years.

The sale, which does not include Abbott's molecular diagnostics and diabetes care businesses, is expected to close in the first half of this year.

The acquisition is "consistent with GE's strategy to invest in high-technology global infrastructure businesses that deliver strong top-line growth, earnings expansion and expanded margins," Jeffrey Immelt, GE chairman and chief executive, said in a statement.

Abbott Chairman and Chief Executive Miles D. White said that market changes over the last decade helped trigger the deal.

"Innovation in this segment will be increasingly driven by automation, system integration and a host of skills that GE can offer," White said.

Shares of North Chicago, Ill.-based Abbott Laboratories closed at a nearly five-year high Thursday amid reports of the agreement with Fairfield, Conn.-based General Electric. The deal was announced after the markets closed.

Abbott stock rose $1.24, or 2.4%, to $52.79 -- its highest closing price since March 4, 2002. GE shares rose 2 cents to close at $38, near the upper end of its 52-week range of $32.06 to $38.49.

Abbott's in vitro diagnostic division tests blood and urine samples to diagnose diseases and other conditions.

GE's primary healthcare business is manufacturing diagnostic equipment, including ultrasound and X-ray machines and screening equipment.

The company entered the molecular diagnostic market when it paid more than $9 billion in 2004 for Britain's Amersham, a bioscience and medical diagnostic firm.

GE is developing molecular agents that target specific diseases when they are injected into the bloodstream. The agents show up during screenings, indicating that a patient has a particular cancer or other disease. Diagnostics related to breast cancer has been a key focus of GE.

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