In a move to broaden its presence in the Latin American market,
) announced that it has entered into a definitive agreement to
acquire Latin American pharmaceutical company, CFR
As per the terms of the agreement, Abbott Labs will acquire the
holding company that owns a 73% stake in CFR Pharmaceuticals.
Abbott Labs will also conduct a public cash tender offer for all of
the outstanding shares of CFR Pharmaceuticals following necessary
The total purchase price comes to approximately $2.9 billion
assuming all publicly-held shares are tendered to the offer along
with the assumption of net debt of approximately $430 million.
The transaction is expected to close by the third quarter of
2014. The acquisition is expected to add approximately $900 million
to Abbott Labs' top line in the first full year post acquisition
Thereafter, Abbott Labs expects double-digit sales growth over
the next several years.
The transaction is also expected to be accretive to bottom line
Headquartered in Chile, CFR Pharmaceuticals has a comprehensive
product portfolio with operations in 15 Latin American markets. The
acquisition is expected to be complementary to Abbott Labs' current
pharmaceutical therapeutic areas of focus including women's health,
central nervous system, cardiovascular and respiratory
Abbott Labs currently carries a Zacks Rank #3 (Hold).
Emerging markets are key focus areas for Abbott Labs. The CFR
Pharmaceuticals acquisition will double Abbott Labs' branded
generics pharmaceutical sales and presence in one of the fast
growing markets. As per IMS forecasts, the Latin American
pharmaceutical market will grow to $73 billion in 2014 and jump to
$124 billion by 2018. Annual growth rates in these markets are
expected to be two to three times that of developed markets over
the coming years.
We remind investors that Abbott Labs became a diversified
medical products company focusing on branded generic
pharmaceutical, medical devices, diagnostic and nutritional
businesses following the separation of its research-based
pharmaceuticals business into a new company,
), in Jan 2013.
The business environment was challenging in 2013 due to
austerity measures undertaken by developed markets.
Hence, Abbott Labs' efforts to broaden its presence in the
emerging markets will help the company to combat the challenging
business environment elsewhere in the world and maintain top-line
Some better-ranked stocks in the broader healthcare sector
). While Allergan is a rank #1 (Strong Buy), Shire is a Zacks Rank
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