Shares of St. Jude Medical, Inc. (NYSE: STJ) soared higher by nearly 30 percent Thursday morning after Abbott Laboratories (NYSE: ABT) announced it has entered into an agreement to acquire the medical device manufacturer.

As part of the agreement, Abbott will acquire St. Jude for a total consideration of $25 billion. St. Jude shareholders will receive $46.75 in cash for each share owned in addition to 0.8708 shares of Abbott common stock, representing a total consideration of approximately $85 per share.

Abbott noted the combined entity will have an industry-leading pipeline of new medical device products across cardiovascular, diabetes, vision and neuromodulation patient care. Moreover, the company said the acquisition will allow it to "compete in nearly every area of the cardiovascular market and hold the No. 1 or 2 position across large and high-growth cardiovascular device markets."

Abott added that the transaction is expected to be accretive to its adjusted earnings per share in the first full year after closing and increase thereafter. The combination is also expected to generate annual pre-tax synergies of $500 million by 2020.

The cash portion of the transaction will be funded through medium and long-term debt.

"Bringing together these two great companies will create a premier medical device business and immediately advance Abbott's strategic and competitive position," said Miles D. White, chairman and chief executive officer, Abbott. "The combined business will have a powerful pipeline ready to deliver next-generation medical technologies and offer improved efficiencies for health care systems around the world."

"Today's announcement is an exciting next chapter for St. Jude Medical, bringing together two industry leaders with a shared passion for innovation, culture and patients," said Michael T. Rousseau, St. Jude Medical president and chief executive officer. "Our combined scale will expand the global reach, competitiveness and impact of our medical device innovation for physicians and hospitals. This transaction provides our shareholders with immediate value and the opportunity to participate in the significant upside potential of the combined organization. I'd like to thank our 18,000 employees whose hard work and commitment help us deliver leading medical technologies to patients around the world."

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