J&J Nears Deal to Buy Abbott's Eye-Surgery Unit

Abbott Laboratories is in advanced talks to sell its eye-surgery equipment business to Johnson & Johnson as the health-care giants remake their lineups of medical devices.

A deal for the Abbott business, formerly known as Advanced Medical Optics, could be announced as soon as Friday, according to people familiar with the matter. As always, the talks could fall apart before an agreement is reached. It isn't clear how much J&J would pay for the business, now known as Abbott Medical Optics, but Abbott bought it for $2.8 billion, including debt, in 2009.

It also isn't clear why Abbott wants out of a business it bought not that long ago, but AMO sales have been sluggish, and the Abbott Park, Ill., company has been doing deals in faster-growing device segments. The biggest of those is a roughly $25 billion pending agreement to buy St. Jude Medical Inc. and its portfolio of heart valves, pacemakers and other cardiovascular devices.

Abbott also has agreed to buy a health-testing company, Alere Inc., for about $5 billion, though it has sought to scotch the deal amid a foreign-corruption investigation that Alere faces. Alere in August filed a lawsuit to force Abbott to complete the acquisition.

There has been a wave of mergers among medical-device companies, which are facing intensifying competition and pricing pressure from networks of hospitals that have themselves been consolidating.

Abbott's medical-optics business makes equipment used in cataract and LASIK vision-correction surgeries, as well as contact lenses. Last year, it notched $1.1 billion in sales, down 6.9%, largely because of a strong dollar. Sales have been picking up this year.

J&J, based in New Brunswick, N.J., also has been acquiring medtech assets as part of efforts to accelerate growth in the unit. In 2012, it bought Synthes Inc., a maker of devices used to treat fractures and traumatic injuries, for roughly $20 billion.

The AMO business would add to J&J's lineup of surgical equipment. It also would complement J&J's portfolio of contact lenses and solutions, part of a $7 billion segment of the $68 billion global eye-health market. It would give J&J more products to pump through its distribution network—and for salespeople to discuss with doctors, common motivations for health-care mergers.

Last year, J&J notched $25.1 billion in medical-device sales, while Abbott had $20.4 billion in total revenue.

Write to Jonathan D. Rockoff at [e-mail], Dana Mattioli at [e-mail] and Dana Cimilluca at [e-mail]

(END) Dow Jones Newswires

September 16, 2016 13:05 ET (17:05 GMT)

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