Abbott Labs is buying St. Jude Medical for $25 billion

Abbott Laboratories is buying St. Jude Medical for $25 billion to create a juggernaut in the market for heart devices.

St. Jude Medical shareholders will receive $46.75 in cash and 0.8708 shares of Abbott common stock, representing about $85 per share.

"St. Jude Medical's strong positions in heart failure devices, atrial fibrillation and cardiac rhythm management complement Abbott's leading positions in coronary intervention and transcatheter mitral repair," the statement said.

The deal is expected to close in the fourth quarter of this year.

Abbott will own or refinance the nearly $5.7 billion in debt that St. Jude has, and plans to fund the cash portion of the deal with debt.

There will be annual pre-tax synergies of $500 million by 2020, the companies said.

St. Jude shares jumped 28% in pre-market trading, while Abbott fell nearly 4%.

Evercore is Abbott's lead financial advisor, with Bank of America Merrill Lynch, who will also provide financing. Guggenheim Securities is advising St. Jude Medical.

More to come ...