Abbott raises $3 billion to fund acquisition
Abbott Laboratories, maker of glucose monitors and heart stents to prop open clogged arteries, sold $3 billion of bonds to fund its acquisition of Advanced Medical Optics Inc.
In addition to financing the purchase of eye-surgery equipment maker Advanced Medical, proceeds from the sale will be used for general corporate purposes, Scott Stoffel, an Abbott spokesman, said today in a telephone interview.
Abbott agreed to buy all of Advanced Medical Optics' shares for a total of $1.36 billion, the company said Jan. 12. Abbott also said it would assume Advanced Medical Optical's debt, valuing the deal at about $2.8 billion. Abbott follows drugmakers Roche Holding AG and Novartis AG in taking advantage of investor demand for highly rated corporate debt to finance takeovers.
"When companies are doing deals here they're seeing strategic assets they can buy on the cheap, and they'll come after it knowing that they can get the financing because they're a high-quality issuer," Bob Gorham, managing director and head of investment-grade bond trading at Broadpoint Capital Inc. in New York, said yesterday in a telephone interview.
The sale was split between $2 billion of 10-year 5.125 percent notes that priced to yield 220 basis points more than similar-maturity U.S. Treasuries, and $1 billion of 30-year 6 percent bonds that pay a spread of 235 basis points over benchmarks, Bloomberg data show. A basis point is 0.01 percentage point.
The Libertyville Townshp-based company hired Bank of America Corp., JPMorgan Chase & Co. and Morgan Stanley to help sell the bonds.