Abbott Laboratories and TheraSense, Inc. announced that the companies have entered into an agreement for Abbott to acquire all of the capital stock of TheraSense for $27 per share in cash. TheraSense, based in Alameda, Calif., develops, manufactures and markets FreeStyle blood glucose self-monitoring systems, and develops systems that feature a very small sample size, rapid test results and less painful testing.

"Together with TheraSense, Abbott can build on its success in the blood glucose monitoring business. We will continue to promote both the MediSense and TheraSense products and brands. This transaction will allow us to better serve the needs of people with diabetes through advanced technology, a promising pipeline, a broader product line, and critical mass in research, development, sales and marketing," said Ed Fiorentino, president, MediSense Products, Abbott Laboratories. "In addition, we will provide TheraSense products with a greater international presence and infrastructure through the global reach of our existing MediSense business."

Under the terms of the agreement, Abbott will acquire all of the outstanding stock of TheraSense for $1.2 billion, net of cash currently held by TheraSense. Excluding one-time charges, the acquisition will result in an approximately one-cent reduction in earnings per share in 2004, and is expected to be accretive thereafter. The transaction is expected to result in one-time charges in the second quarter, primarily for in-process research and development, and throughout 2004 for integration expenses. The transaction is subject to: approval by holders of a majority of TheraSense common stock at a special meeting of stockholders; regulatory approvals; and customary closing conditions. Closing is expected during the second quarter of 2004.

"Abbott is the ideal fit for TheraSense. They share our mission of improving the lives of people with diabetes," said Mark Lortz, chairman, president and CEO, TheraSense. "The combination will create opportunities in R&D as we progress toward helping people with diabetes through advancements in continuous blood glucose monitoring and future integrated systems."

Abbott entered the blood glucose monitoring field with the acquisition of MediSense in 1996. MediSense was the first company to commercialize biosensor technology and grew rapidly with its product, Precision QID. Today, MediSense continues to offer additional innovative products such as Precision Xtra, the first blood glucose monitor to offer ketone testing, and Precision PCx, a hand-held, point-of-care blood glucose monitoring system used in the hospital setting. Each day, Abbott MediSense Products help more than 2.5 million people manage diabetes around the world.

TheraSense's entry into the field of diabetes testing began in mid-2000 with the launch of its FreeStyle blood glucose monitoring system. The company's FreeStyle system has a very small sample size requirement (0.3 microliter), which is 50-90 per cent less than most conventional testing systems. This permits finger testing or less painful alternate site testing on the forearm, upper arm, thigh, calf and base of the hand. In October 2003, TheraSense launched its FreeStyle Flash blood glucose monitoring system. FreeStyle Flash combines the world's smallest glucose meter with a very small sample size, a fast test time of about seven seconds, a backlit panel display, a lighted test strip port for easy testing at night or in other low light conditions, and four customizable daily alarms.

The WHO estimates that there are 185 million people with diabetes worldwide with only 40 per cent diagnosed and treated. This number is expected to grow to 500 million by 2025 due to aging populations, sedentary lifestyles and increasing obesity. The blood glucose monitoring market is expected to have reached more than $5 billion in sales in 2003, and is projected to grow approximately 10 per cent compounded annually.