Abbott Laboratories Inc. said on Tuesday it has agreed to acquire diabetes test maker TheraSense Inc. for $1.2 billion, taking advantage of a growing diabetes market in the United States.
Abbott, based outside of Chicago, will pay $27 per share for Alameda, California-based TheraSense, a premium of about 33 percent over its latest Nasdaq price of $20.30 on Monday.
Abbott said the deal would reduce 2004 earnings by 1 cent per share, excluding one-time charges, and add to earnings in 2005 and beyond.
TheraSense in October posted third-quarter net income of $2.7 million and revenue of $58.2 million. TheraSense's biggest driver of revenue growth has been its "FreeStyle" test strips and kits for testing levels of blood sugar, or glucose.
With the deal, Abbott gains access to TheraSense's new technology, the FreeStyle Navigator product that continuously monitors glucose and transmits the results to a small, wireless device that may be worn on a belt or carried in a pocket or a purse. TheraSense has applied for U.S. Food and Drug Administration clearance to sell the device.
For its part, Abbott has bucked the trend set by several other makers of prescription drugs that have divested units that manufacture other medical products, such as devices and diagnostics. Abbott's strategy, similar to Johnson & Johnson's, is to diversify in several areas of health care.
Abbott also sells diabetes monitors and said it will use its global reach in diabetes testing as way to market TheraSense's products.