) recently announced that the company has separated its
research-based pharmaceuticals business by creating a new company
The decision to spin off the business was taken back in
October 2011 when Abbott decided to separate its business into
two publicly traded companies - one in diversified medical
products and the other in research-based pharmaceuticals.
The research-based pharmaceutical company, AbbVie, includes
proprietary pharmaceuticals and biologics including products like
Humira, Lupron, Synagis, Kaletra, Creon and Synthroid. The
business generated sales of approximately $17.4 billion in 2011
while sales are expected to exceed $18 billion in 2012.
The diversified medical products company, with estimated sales
of about $23 billion, includes Abbott's branded generic
pharmaceutical, devices, diagnostic and nutritional
The existing shareholders of the parent company generally get
new shares in the subsidiary when the company spins off one of
its business into a separate company. The subsidiary becomes a
separate legal entity with its own management team and board of
On Nov. 28, 2012, Abbott declared a special dividend
distribution of all outstanding shares of AbbVie common stock.
The shareholders of Abbott received one share of AbbVie common
stock on Jan. 1, 2013 for every one share of Abbott common shares
held as of close of business on Dec. 12, 2012.
The company is looking to ensure growth through this split. We
are positive on the split which should allow the two separate
entities to perform in a more focused manner.
As expected, the news was well received by investors with
Abbott's shares increasing 2.27% in regular trading to close at
We currently have a Neutral recommendation on Abbott, which
carries a Zacks #3 Rank (Hold). Right now,
) looks attractive with a Zacks #2 Rank (Buy).
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