Abbott Nears Deal for Cancer Test Maker Exact Sciences

Original from: Bloomberg

Abbott Laboratories is nearing a potential acquisition of cancer screening company Exact Sciences Corp., people familiar with the matter said, in what could be the biggest deal of the year in the global health-care sector.

The US medical-device maker is discussing the terms of a transaction with Madison, Wisconsin-based Exact Sciences, according to the people. A deal may be announced in the coming days, they said.

Shares in Exact Sciences rose as much as 29% on Wednesday for their biggest intraday gain in almost three years. The stock closed 24% higher in New York trading, giving the company a market value of about $16.3 billion. Abbott fell 3% to a market value of roughly $219 billion. 

Deliberations are ongoing and could still be delayed or falter, the people said, asking not to be identified because the information is private. 

Representatives for Abbott and Exact Sciences didn’t respond to requests for comment. 

Diagnostics Drive

Exact Sciences’ diagnostic tests include Cologuard, which helps screen for colorectal cancer, the second-leading cause of cancer deaths in the US. It’s been used to screen for colorectal cancer 20 million times since receiving FDA approval in 2014, according to Exact Sciences’ website. 

Led by Chief Executive Officer Kevin Conroy, the company employs more than 6,500 people and runs nine research and development centers and labs, its website shows.

Abbott makes an array of medical devices, nutrition supplements and other health-related products. The company has been interested in expanding into diagnostics through mergers and acquisitions, CEO Robert Ford said in July while discussing quarterly results. A takeover of Exact Sciences would be Abbott’s second-biggest ever and its largest in nearly a decade.

Bloomberg Intelligence analysts wrote on Wednesday that Abbott has the capacity for as much as $30 billion of debt-funded M&A “aided by low 1.3x leverage and annual free cash flow of $7 billion.”

While diagnostics were a major boon for Abbott during the Covid-19 pandemic, sales have since dwindled. Its recent focus has been on medical devices, with its glucose monitors driving growth. The company makes the devices, which help monitor blood sugar, for healthy people and those with diabetes.

The health-care sector has been one of the driving forces behind the global M&A resurgence this year, thanks to transactions like the up to $18.3 billion buyout of medical device maker Hologic Inc. by Blackstone Inc. and TPG Inc., and Johnson & Johnson’s $14 billion-plus acquisition of Intra-Cellular Therapies Inc.

Source: Abbott Nears Deal for Cancer Test Maker Exact Sciences