The deal to buy St. Jude raises doubts that Abbott will go through with its purchase of diagnostics company Alere, which is under federal investigation for its sales practices.
Abbott said on Thursday it would take on or refinance about $5.7 billion of St. Jude's net debt.
St. Jude shareholders will receive $46.75 in cash and 0.8708 Abbott shares, or about $85 per share. This represents a 37 percent premium to St. Jude's Wednesday closing.
St. Jude's shares were up 27 pct at $78.82 in premarket trading. Abbott shares were down 5 percent at $41.70.
Abbott said St. Jude Medical's devices for heart failure, blockages and abnormal heart rhythm complement its range of heart products.
The deal will add to Abbott's adjusted earnings per share in the first full year after the close of the transaction, the company said. It will add 21 cents per share in 2017 and 29 cents in 2018.
Abbott's cardiovascular device unit will have annual sales of $8.7 billion after the business are combined.
Abbott said in February it would buy Alere for $5.8 billion, to become the leader in point-of-care diagnostic testing.
Later that month, Alere said it received a grand jury subpoena from the U.S. Department of Justice and that it would delay filing its annual report. Alere has also been hit with a securities fraud lawsuit, according to a Bloomberg report.
Abbott CEO Miles White last week declined to respond directly to a question on the Alere agreement, fueling speculation the deal might not close.
Evercore is advising Abbott on the St. Jude deal, while Guggenheim Securities is the financial adviser to St. Jude.
Wachtell, Lipton, Rosen & Katz served as legal counsel to Abbott, while Gibson, Dunn & Crutcher advised St. Jude Medical.
St. Jude's stock is up 48 percent in the past three months and 43 percent in the past month.
STJ in past 6 months
— CNBC's Fred Imbert contributed to this report.