Abbott sells spine business to Zimmer
This article was originally published in Scrip
Abbott Laboratories tis to sell its Spinebusiness for $360 million to the US-based spine speciality companyZimmer. The business was formed by Abbott's acquisitions of Spinal Concepts for $60 million in 2003 and Spine Next for $200 million in 2004. Abbott Spine, which employs about 300 people globally, had revenues of $109 million last year, while Zimmer Spine's revenues for the same period were $197 million. Zimmer expects to fund the acquisition from cash and borrowings under existing credit facilities. The business has become increasingly unprofitable for Abbott and has received diminished attention due to successes in it pharmaceutical businesses. Morgan Stanley analysts said that Abbott Spine would have required significant investment to grow into a competitive business and that the deal makes sense as Abbott can deploy internal capital at higher returns elsewhere. Zimmer intends to maintain a presence at Abbott Spine's Austin, Texas, and Bordeaux, France, sites and also expects to incur charges of $40-50 million in restructuring and integration costs.