Chicago-headquartered Abbott announced Thursday it is acquiring Minnesota-based St. Jude Medical in a cash-and-stock deal worth about $25 billion. The acquisition, subject to regulatory approvals, will strengthen Abbott's position in the market for medical devices used to treat cardiovascular diseases.

Under the terms of the takeover, St. Jude Medical shareholders will receive $46.75 in cash and 0.8708 shares of Abbott common stock for each share they own, which brings the total compensation to about $85 per share, when considering Abbott's five-day volume weighted average share price of $43.93, according to the statement released by the companies.

"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," Miles D. White, chairman and CEO of Abbott, said.

Cardiovascular medical devices are big business, given that more than 40 percent of adults in the U.S. alone are expected to have one or more forms of cardiovascular disease by 2030, the statement said, adding that the combined business will have one of the broadest portfolios of devices to help healthcare systems provide better care for patients while increasing efficiencies and reducing costs.

The Chicago pharmaceutical giant expects combined annual sales of $8.7 billion and foresees an aggregate market opportunity of $30 billion.

The merger is expected to save $500 million in pretax synergies by 2020, including sales and operational benefits, the statement said. St. Jude Medical has net debt of about $5.7 billion on its books, which will be assumed or refinanced by Abbott, which will fund the cash portion of the deal through medium- and long-term debt.

Michael T. Rousseau, St. Jude Medical president and CEO, said: "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."

Shares of Abbott had ended trade Wednesday on the New York Stock Exchange flat, but were trading about 5 percent lower during premarket trade at 7:30 a.m. EDT Thursday. In contrast, St. Jude Medical shares closed about 3 percent higher on NYSE Wednesday and were trading about 27 percent higher during premarket trade Thursday morning.