Abbott Laboratories (ABT.N) said it would sell its eye care business to Johnson & Johnson (JNJ.N) for about $4.33 billion in cash to focus on cardiovascular devices and diagnostics business.
The company expanded its medical device and diagnostics businesses this year with a $25 billion deal for St. Jude Medical Inc (STJ.N) and a $5.8 billion deal for Alere Inc (ALR.N).
Abbott Medical Optics, which the company acquired for nearly $1.4 billion in 2009, reported sales of $1.1 billion for 2015, J&J said on Friday.
The Wall Street Journal earlier reported that Abbott was in talks to sell the business to J&J.
"We've been actively and strategically shaping our portfolio, which has recently focused on developing leadership positions in cardiovascular devices and expanding diagnostics," Abbott Chief Executive Miles White said.
The Alere deal has run into rough weather with the target company filing a lawsuit in August, accusing Abbott of dragging its feet on key antitrust submissions to sabotage the deal.
To make matters worse, St. Jude is facing allegations that its pacemakers and defibrillators have cyber security flaws that hackers could exploit to harm patients. The company has sued short-selling firm Muddy Waters and cyber security firm MedSec Holdings Inc who raised the allegations.
Wells Fargo analysts said Abbott was likely selling the eye care business because it was less of a strategic fit once it acquired St Jude and the company would need to reduce debt after the two deals.
Abbott had long-term debt of about $6 billion as of June 30.
For Johnson & Johnson, the deal would help expand its eye care portfolio with products in cataract surgery, laser refractive surgery and consumer eye health units.
The World Health Organization estimates that about 20 million people are blind from age-related cataracts and that there are at least 100 million eyes with compromised visual acuity caused by cataracts, J&J said.
Friday's deal, which is expected to close in the first quarter of 2017, is expected to modestly add to J&J's earnings immediately.
J&J's vision care unit, which includes Acuvue brand contact lenses, generated revenue of $685 million in the second quarter.
Abbott shares closed up 1.8 percent at $41.87 on Friday. J&J shares closed down 0.3 percent at $118.25.
(Reporting by Akankshita Mukhopadhyay and Ankur Banerjee in Bengaluru; Editing by Saumyadeb Chakrabarty and Don Sebastian)