Santa Ana-based eye surgery device and contact lens solution maker Advanced Medical Optics Inc. is being bought for $2.8 billion by Abbott Laboratories Inc. of suburban Chicago.
The deal is the biggest in Orange County in the past year or so and values Advanced Medical at 150% more than what the company was worth on Friday.
Abbott is paying $1.4 billion for Advanced Medical and taking on $1.4 billion in the company’s debt.
Shares of Advanced Medical shot up as high as 150% in Monday trading before moderating. They closed up 143% on a market value of $1.3 billion.
Abbott is buying Advanced Medical at a discount. The company’s shares traded for twice as much as they do now at the start of 2008 and four times in 2007.
Advanced Medical has slumped this year on declining laser vision correction surgeries, which patients pay for themselves.
The company makes lasers and related equipment for the laser vision surgeries and gets royalties each time one is performed with its machines.
Advanced Medical also makes devices for cataract surgery and contact lens solutions.
The company is the leading maker of devices for laser vision surgery, No. 2 in the cataract surgery devices and No. 3 in contact lens solutions.
The deal is an expansion into eye products for Abbott, which makes drugs, medical diagnostic products and devices.
The two companies expect the acquisition to close in the first quarter. Advanced Medical will become part of Abbott’s medical device business and retain its Santa Ana operations.
Jim Mazzo, who’s the only chief executive Advanced Medical has known since its 2002 spinoff from Allergan Inc. of Irvine, is set to stay on as president of the operations acquired from Advanced Medical, an Abbott spokesman said.
In buying Advanced Medical, Abbott’s “really making a bet that once the economy returns,” it will be able to capitalize on Advanced Medical’s 60%-plus market share of the laser vision surgery market, said Louise Chen, an analyst with Collins Stewart LLC.
Analyst Sara Michelmore of Cowen & Co. said she believed reviews of the proposed deal were likely to be mixed, particularly given recent negative sentiment on Advanced Medical shares and laser vision correction’s economic sensitivity, although she viewed Abbott’s strategic rationale positively.
The deal is the biggest in OC since late 2007, when Italy’s Luxottica Group SPA paid $2.1 billion for Foothill Ranch-based sunglasses and clothing maker Oakley Inc.
The last sizable acquisition locally was November’s buy of Lake Forest-based home healthcare provider Apria Healthcare Group Inc. by Blackstone Group LP for $1.7 billion.
