Boston, MA 05/21/2014 (wallstreetpr) – Abbott Laboratories (NYSE:ABT) recently announced that they will be acquiring CFR Pharmaceuticals at an estimated price of $2.9 billion. This would enable the company to make its presence felt in the South American region.
ABT will acquire the holding company that collectively holds a 73% share in CFR. Abbott will, as a result, take care of the $430 million debt owed by the Santiago, Chile based company.
Outcome of the Takeover
The initial knee jerk reaction on this news caused the company’s shares to decline by about 0.5% at the bourses. However, this acquisition will make Abbott Laboratories (NYSE:ABT) among the top ten drug companies in Latin America. This will additionally add to the generic business of Abbott in this region by more than twice the business it previously conducted in South America.
This would also involve the manufacture of generic drugs that may be marketed under another company’s established brand. It would be mandatory that the drugs manufactured would be in line with the original products.
Background of CFR
CFR has a strong presence in about 15 countries in South America. The company produces more than a 1000 products which cater to women’s health, cardio vascular diseases and the central nervous system.
The company also employs more than 7000 people and has R&D active operations in Chile, Columbia, Peru and Argentina.
The Advantage to Abbott
Abbott Laboratories (NYSE:ABT) has always maintained a long term strategy to participate in the growing prospects of the emerging markets. This acquisition will enhance their prospects further by being able to provide their services in this region.
With this acquisition of CFR, Abbott Laboratories will increase their increase their sales by about $900 million by 2015. Besides, the Company expects to achieve a double digit growth in the following years.
This deal is to be completed by the third quarter of this financial quarter, and according to the estimates of Abbott Laboratories (NYSE:ABT), the pharmaceutical business in Latin America is expected to grow to $128 billion by 2018. The projected figure for the growth in this year, in this market is expected to be $73 billion.
