Abbott Continues to Expand

Abbott Laboratories (ABT - Analyst Report) continues to be in acquiring mode with the company recently announcing that it intends to acquire Starlims Technologies (LIMS) for $123 million in cash.

Starlims is a leading provider of laboratory information management systems. It improves the reliability of laboratory sampling processes, supports compliance with domestic and international regulations and industry standards, and provides comprehensive reporting, monitoring and analysis capabilities. The software is used to manage laboratory testing.

This acquisition should help Abbott strengthen its position in the global diagnostic testing market. Under the terms of the agreement, Abbott will acquire Starlims for $14 per share. Starlims currently has about $18 million in cash on hand.

The transaction, scheduled to close in the first quarter of 2010, will not affect Abbott’s earnings guidance for 2009. The company expects to deliver earnings in the range of $3.70 - $3.72 per share in 2009.

Abbott has been on a buying spree of late. Earlier this year, Abbott completed its acquisition of Advanced Medical Optics. Besides this, the company also acquired eye care companies Visiogen and Evalve, Inc., which focus on the development of devices for minimally invasive repair of cardiac mitral valves. In addition, in late September Abbott announced that it would acquire the pharmaceuticals business of Belgian company Solvay Group.

With these deals, we believe Abbott is looking to diversify its product portfolio so that it can reduce its dependence on Humira, which contributed $4.5 billion to sales in 2008. We currently have a Neutral recommendation on Abbott.

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