Abbott to Spinoff Hospital Products Unit
CHICAGO (AP) _ Abbott Laboratories plans to spin off much of its hospital products business, creating a company with estimated worldwide sales of $2.5 billion.
The move will allow Abbott to concentrate on higher-growth segments of its medical products business, Abbott chairman and CEO Miles D. White said Friday.
``With enhanced strategic, financial and operational flexibility, the new company will have freedom to pursue alliances and other expansion opportunities,″ White said.
The spinoff will be in the form of a tax-free distribution to Abbott shareholders of a new publicly traded stock for the new company. The value of the shares have not been determined, White said. The transaction, which is expected to completed in the first half of 2004, will not affect Abbott’s dividend.
The new company, which has not been named, will sell medication delivery systems, infusion therapy, critical care products, generic pharmaceuticals. The products currently account for a little less than 10 percent of Abbott’s sales.
Abbott will retain its hospital operating room pharmaceuticals, proprietary hospital pharmaceuticals and pain management products, and portions of the international hospital business. It will also retain Abbott Vascular Devices and the recently acquired Spinal Concepts, which will continue to be operated through the company’s medical products group.
The new company, to be headquartered in Lake Forest, will employ about 14,000 people worldwide.
Christopher B. Begley, the current president of Abbott’s U.S. hospital business, will be the new company’s chief executive officer. David A. Jones, co-founder and chairman of Humana Inc., will serve as the new company’s chairman of the board.
``We will have a nearly 70-year track record of delivering high-quality hospital products to our customers, and we will be the only company of our size focused solely on the hospital customer,″ Begley said.
North Chicago-based Abbott posted $1.05 billion in profit for the first six months of the year, down 27 percent from $1.45 billion for the first half of 2002, though revenues rose 9 percent to $9.3 billion.
The company has shown continued strength from its booming U.S. pharmaceuticals business. But results from its medical products division were mixed, with sales declining for some U.S. hospital products.
Along with other health care companies, Abbott has been the target of a federal investigation into whether the government is being overcharged for liquid nutrition products fed to patients through tubes.