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Zoetis (ZTS) Tides Over HSR Hurdle for Abaxis Acquisition

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Zoetis Inc. ZTS announced that the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act) has expired in relation to its proposed acquisition of Abaxis Inc., ABAX.

Both companies entered into an agreement in May whereby Zoetis agreed to acquire Abaxis in an all-cash offer of $83 per share or approximately $2 billion in aggregate.

The deal is subject to customary closing conditions including regulatory approvals as well as the consent of Abaxis shareholders, who will vote on the transaction at a special meeting, scheduled to be held on July 31, 2018. Zoetis expects to complete the acquisition before the year-end and intends to fund the purchase through a combination of existing cash and new debt.

Notably, California-based Abaxis is engaged in manufacturing and developing portable blood analysis systems used across a broad range of medical specialties in human or veterinary patient care to provide clinicians with rapid blood constituent measurements.

The buyout is expected to boost Zoetis’ presence in veterinary diagnostics portion of the animal health market. With it, Zoetis will get access to Abaxis’ VetScan portfolio of bench top and handheld diagnostic instruments and consumables. The transaction will also enable the company to support veterinarians by providing comprehensive solutions to predict, prevent, detect and treat diseases in animals.

The diagnostics category is a fast-growing space within the animal health industry and has witnessed a CAGR of approximately 10% over the last three years. Zoetis expects the veterinary diagnostics category to continue growing more rapidly than the animal health industry, thus registering mid to high single digit improvement. The company projects the transaction to be accretive to its bottom line in 2019.

Shares of Zoetis have rallied 20.6% year to date, outperforming the industry’s increase of 5.2%.


Zoetis currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the pharma sector include Genomic Health, Inc. GHDX and Taro Pharmaceutical Industries Ltd. (TARO - Free Report) , both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Genomic Health’s earnings estimates have been revised 4.4% upward for 2018 over the past 60 days. The stock has soared 46.7% so far this year.

Taro Pharmaceutical’s earnings estimates have moved 13% north for 2018 and 12.4% for 2019 over the past 60 days. The stock has gained 9.6% so far this year.

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