If we told you on Friday that a decent-sized medical merger was coming with a 100% premium, you probably wouldn’t have believed it. We are having a hard time believing it even after the fact. Abbott Laboratories (NYSE: ABT) is buying Advanced Medical Optics Inc. (NYSE: EYE).
It seems almost imaginary that Advanced Medical Optics Inc. (NYSE: EYE)stock is up more than 100% today. But it is. Up 144% to $21.68 infact.
Abbott is spending about $1.36 billion plus debt to gain market sharein eye-care and laser vision. The price for "EYE" holders is $22.00per share in cash. It is of no surprise that the board of directorsapproved the deal.
Abbott said the deal will be neutral to 2009 earnings and it reaffirmedtargets of $3.31 to $3.33 EPS for 2008 and $3.65 and $3.70 EPS in2009. Thomson Reuters (First Call) has consensus estimates at $3.32 in2008 and $3.66 in 2009.
This essentially exonerates Advanced Medical from the woes of its 2007eye drop infections which created a major recall and put a cloud overthe stock.
Unfortunately, shares were north of $40.00 for a brief period less than two years ago. That was then.
Jon C. Ogg
January 12, 2009