Abbott Breaks into Lucrative Cancer Screening Market with $21 Billion Exact Sciences Purchase

Suburban Chicago is a long way from Britain, but they’re still calling it a bloody good deal.

Illinois-based healthcare giant Abbott Laboratories said Thursday that it agreed to buy cancer-screening specialist Exact Sciences and its breakthrough blood test for $21 billion.

Match Made in Lab Heaven

Founded in 1880s Chicago by a pharmacist with a talent for formulating medicines from plants and herbs, Abbott is now a multinational healthcare giant with sales of $42 billion last year. Nearly half of its business comes from medical devices, including pacemakers and implantable cardiac defibrillators, as well as increasingly popular blood sugar monitors for diabetes patients.

Abbott also has a smaller diagnostics business, which executives have openly enthused about expanding. They got a taste of the potential during the pandemic when the company’s popular COVID-19 home test boosted sales. In Exact Sciences, they found a dream acquisition target specializing in cancer screening and oncological tests. It’s one of the fastest-growing segments in the health sector: Abbott valued the US cancer screening and diagnostics market at $60 billion. 

Earlier this month, Exact reported a record $851 million in third-quarter revenue, including $666 million from its screening business, which sells the leading colorectal cancer test, Cologuard. With its Cancerguard, Exact is also one of a handful of companies producing blood tests capable of screening for multiple early-stage cancers. “Our vision here is really to build the premier cancer diagnostic company in the world,” Abbott CEO Robert Ford said on an analyst call. The price of that vision is a steep one out of the gate:

• Exact Sciences shareholders get $105 a share, a roughly 50% premium from the November 18 closing price before word of the pending agreement began circulating. Exact rose 16.8% on Thursday to $100.67, while Abbott fell 1.7% to $123.97.
• It’s the healthcare sector’s biggest deal since Pfizer acquired Seagen for $43 billion in 2023. And it’s Abbott’s second-priciest acquisition ever; the firm paid $30 billion for medical device rival St. Jude Medical in 2017.

Wall Street Windfall: Healthcare has made investment bankers happy this year, driving an uptick in mergers and acquisitions that’s bolstering their fees. Among the largest deals before Abbott’s were buyout firms Blackstone and TPG teaming to acquire medical device maker Hologic for $18.3 billion, Johnson & Johnson agreeing to buy Intra-Cellular Therapies for $14.6 billion, and Mallinckrodt and Endo International striking a $6.7 billion merger.