UPDATE 3-Abbott enters eye arena with $1.4 bln AMO deal

(Adds Abbott, analysts comments, details on deal, shares)

By Ransdell Pierson and Lewis Krauskopf

NEW YORK, Jan 12 (Reuters) - Abbott Laboratories Inc (ABT.N) plans to buy Advanced Medical Optics EYE.N for nearly $1.4 billion, making it the leader in Lasik laser vision correction and second-biggest player in cataract surgical lenses.

The $22-per-share deal, announced on Monday, represents a nearly 150 percent premium for AMO, which had lost almost two-thirds of its value in recent months as the weak economy cut demand for elective Lasik procedures.

Abbott, which currently sells no eye products, will become an instant leader in the arena, furthering a diversification strategy that has made it one of the top-performing large U.S. healthcare companies during the economic downturn.

"AMO is a depressed, distressed asset, not so much because of the product portfolio, but because of under-management and a cyclical, tough environment for Lasik," Jefferies & Co analyst Peter Bye said. He called the steep premium justifiable for a long-term strategic buyer like Abbott.

Including $1.4 billion in debt, Abbott values the transaction at about $2.8 billion, making it one of the biggest recent healthcare deals at a time when depressed share prices are making many companies easier prey.

AMO shares surged 144 percent to $21.63 in midday trading from their Friday close of $8.85. AMO had traded at $24.90 in June before the weak economy hurt the Lasik business.

The company is the No. 3 player in contact lens care products, a category also hurt by the deteriorating economy.