Abbott Laboratories Plans Split Into Two – Analyst Says $54B Takeover Opportunity

On Wednesday, large-cap drugmaker Abbott Laboratories (ABT) announced that it plans to split the company into two separate publicly traded companies – one for medical devices and generic drugs that will keep the namesake, and another for prescription medicines. Some analysts are saying that the prescription spinoff will be an attractive takeover target.

Abbott is best known for selling Humira, an anti-inflammatory with $6.5 billion in annual sales. Humira is the second best-selling drug in the world after Pfizer’s (PFE) Lipitor, and it’s expected to earn $11 billion in annual sales by 2016. (It won’t face generic rivals until at least 2017, according to Bloomberg.)

Humira and other drugs under Abbott are expected to bring in revenue for the prescription spinoff of about $18 billion this year. According to Jefferies Group Inc. analyst Jeffrey Holford, the prescription business may be worth $29/share, for a total value of $45 billion based on Abbott’s shares outstanding.

Jami Rubin of Goldman Sachs claims a value of $54 billion and says it may go up even higher with cost cutting.

According to Holford, the new spinoff may attract takeover bids from Merck & Co. (MRK), AstraZeneca Plc (AZN), Roche Holding AG, or Bayer AG. The drug spinoff “is likely to be an attractive target…this will be a fairly clean, stand-alone unit, the type that gets picked up.”

Bloomberg reports that Abbott also has “experimental drugs for kidney disease, hepatitis C, and multiple sclerosis nearing the market, though none will likely match Humira’s sales.”

In the meantime, analysts expect this news to bring new attention to Abbott Laboratories stock. The split “is good news,” Jan David Wald, an analyst at Morgan Keegan & Co. told Bloomberg. “You’ll start to see more people interested in the stock, which has languished for years. The two companies each will be more valuable than they are together.”

For a greater look at this company, use Kapitall’s Turbo Chart to compare ABT against performance of the S&P 500:

 

For another look at this stock, use Kapitall’s Compar-O-Matic to compare average analyst expectations against industry peers:

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