Abbott Acquires Exact Sciences What does it Mean for You?

Episode Transcript

Speaker 1 (00:04):
Thirteen ten, Wi b A and asked the experts rush
by Wisconsin Capital Management online whizcap dot com. That's wis
cap dot com. I hope you've had a chance to
check out the website. If you haven't been there yet
or haven't been there recently, head on over wizcap dot com.
That's wiscap dot com. You can learn more about Wisconsin
Capital Management. There's also an opportunity right on that main

(00:26):
page to start a conversation ask a question right online
at whizcap dot com at wiscap dot com. Joining us
this morning are Tom and Nathan Plumb with Wisconsin Capital Management.
Tom is a chartered Financial analyst. Nathan is a Certified
Trust Financial Advisor with Executive MBA. Tom, how you doing
this morning?

Speaker 2 (00:47):
Oh, we're doing very good. This is November twenty fourth,
and we just had a great Wisconsin football weekend with
the Badgers waiting against the ALIGNI and the Packers, of course,
making some of our friends up in Minnesota suffer.

Speaker 1 (01:04):
It's always good when you can make your two neighbors uncomfortable,
and yeah, make them suffer a little.

Speaker 3 (01:08):
Bit for sure. Nathan, how are you doing this morning?

Speaker 4 (01:12):
Yeah? Doing wonderful. Yeah, I was actually at the Badger
game and what a great experience, and the students rushed
out on the field and yeah, things are going well.

Speaker 3 (01:20):
Yeah, what's that like to see in person?

Speaker 1 (01:22):
I've obviously seen photos, but I've never actually seen that
happen in person.

Speaker 3 (01:25):
How what was that like on Saturday?

Speaker 4 (01:28):
We could really just feel the energy. You could kind
of see the student section kind of moving down the stands,
kind of positioning themselves, and then yeah, they I remember
in the nineties there was an incident where actually I
think someone became paralyzed suffocated, but they changed the engineers
changed that around and now you can just essentially kind

(01:49):
of go down the stairs and go on the thing.
The security guards are pretty well trained and it just
kind of let you do that. So I just want
to make sure that no one gets hurt and no
one gets trampled, and then you just want to make
sure that the opposing players and staff can get off safely.
So yeah, it's it was really exciting a lot of energy,
and yeah, I was very proud day to be a Badger.

Speaker 3 (02:09):
It was a great day, that is for sure. And yeah,
they've really they really do.

Speaker 1 (02:13):
A nice job handling things at app camp at Camp Randall,
and we think about things you know, locally, uh, you know,
sense of pride here in southern Wisconsin, State of Wisconsin.
Obviously the Badgers are a big one. Another big sense
of pride I think for a lot of folks is
Exact Sciences. And we are actually going to talk about
what's going on with Exact Sciences. They're Exact Sciences being

(02:35):
acquired by Abbott Labs for for a pretty significant amount
of money. And Nate, let's talk a little bit about
this acquisition and kind of this obviously for a number
of reasons, literally hits very close to home, doesn't it.

Speaker 4 (02:49):
Yeah, it's just a local success story here. So the
CEO and found the CEO is Kevin Conroy. He came
out of a company that was liquid called third Wave.
He started this with a few partners with some scientists
and some finance people and yeah, grew it. And the
exciting news that is gotting acquired by Abbott Labs for

(03:12):
twenty three billion dollars. And it's actually a publicly traded stock,
so it's going to get bought out at one hundred
and five dollars a share in cash.

Speaker 1 (03:22):
It's pretty significant. Then when we look at some of
that stuff too. I know, obviously when it comes to
exact scientists Exact Sciences, I'm going to get that right,
and I know it. I wanna say scientists, but Exact
Sciences We've got obviously a lot of a lot of
people that work there. The listener to the program and Nathan,
I know that as one of those areas, and those

(03:43):
are some people that, as we talk about sometimes changes
with stocks and other other investments and other type of planning.
Those are the type of people you really want to
talk to, aren't they.

Speaker 4 (03:52):
Yeah, we have both friends and clients that work at
Exact Sciences, and it's a very large imploring area, so
I'm sure a lot of people do. We got feedback
that they had a Zoom meeting on Thursday to talk
about the acquisition, and uh they summed up it was essentially, uh,
wait until the second quarter of next year and we'll
give you more information. So uh, my dad, then I

(04:14):
thought we could be a little bit more helpful and.

Speaker 1 (04:16):
With this show right here, yes, give us give us
some guidance and some answers, which we're really looking forward to.
As we talked this morning with Nathan and Tom plumb.
Of course, they come to us from Wisconsin Capital Management
Online wiz cap dot com. That's w I s c
ap dot com. So let's start out with kind of
what this acquisition, what does it what does it tangibly mean?

Speaker 4 (04:38):
Yeah, so Abbot Labs is actually fairly close to us.
They're in Abbott Park, Illinois. Abbott Labs is such a
big company that have their own zip code, but essentially
it's a little bit in northern Chicago suburbs, kind of
between Lake Forest and Waukegan. So the company that has
three main divisions. It has a diagnostic division as a

(04:58):
medical device division, and then it has some cool consumer
brands that you probably heard of, so those supplements for
infants called Similac, more elderly people and sure, and then
of course they have kids and probably teenagers pediolites, so
the electrollic drink is pretty popular. Exact Sciences is going
to be part of the diagnostics division of Abbot Labs.

Speaker 1 (05:20):
So what happens then when it comes to things like employees,
like their benefits and those type of systems. What are
some of the details on that.

Speaker 4 (05:28):
Yeah, Traditionally the larger employer, so the Abbit Labs, which
is going to buy Zach Sciences. Eventually those systems will
turn over to their systems, their HR their retirement, but
that will take and take a lot of time. These
large deals take a while to close. So usually if
you're buying another public traded company or another company, you

(05:50):
can kind of estimate it takes between six to eighteen months.
And in this particular case, the closing date is June
thirty of twenty twenty six. And so that's essentially why
Zach Science has said we have to wait until the
second quarter of next year to tell you things.

Speaker 3 (06:06):
Really great guidance.

Speaker 1 (06:07):
As morri As, we talked with Nathan and Tom Plumb
from Wisconsin Capital Management Online wiz cap dot com that's
w I s c a p dot com talking about
the recent acquisition of Exact Sciences by Abbott and what
that means. And let's talk then and get into some
of the impact then that that this merger will have
on things like salaries, of course, benefit packages, health plans. Obviously,

(06:31):
when you're when you're one company is being absorbed by
another or becoming brought into another, there's going to be
some changes there as well, aren't there.

Speaker 4 (06:39):
Yeah. Traditionally the larger the company in recent kind of
employment is that they really like you to work at
the office, and so Exact Sciences is probably a little
bit more liberal with some more work at home jobs.
When you get to acquired by a larger company, they
tend trend in NHU that they really want you to

(07:01):
work at the office and bring the team, So that
definitely could affect some people. So and then you know,
luckily that Abbot Labs doesn't have a similar thing in
their product portfolio, so I would really doubt that mass
layoffs would happen that as they try to like you know,

(07:21):
you know, get the thing more efficiently and try to
integrate into Labs. So I wouldn't expect that just because
Abbot Labs doesn't have a a cancer diagnostics division. They
have a division that like detects your DNA and things
like that. But yeah, there's if you're in sales, that

(07:42):
that's the kind of the first thing that usually these
mergers they kind of make sure they look closely, so
you know, you got to make sure that you're performing.
You should be okay if you're average or you know,
sometimes they have these different goals different in seys and
usually kind of attend attacks. These salespeople the most, so
usually you're the most affected there. So yeah, you'll become
a part of the division. So your HR plan, retirement plan,

(08:06):
retirement benefits, payroll, we'll all switch over to abbots systems,
and uh you know the key thing is that you
just have to really kind of track this Chamans. It
is helpful for us to cope go over it. But
you know, if if the culture or if you know,
if you can't remote remotely as well that you know,
sometimes you're going to get you might want to choose

(08:28):
their work somewhere else because you got your your options
have been fully vested. They'll so you get cash and
around you thirty if that pan plays out, and then yeah,
and if you own the the bonds, they'll be trading
close to the part as well. So the uh I
should mention that too. At one point eight million dollars

(08:49):
that exact science is a debt will become abbot abbits
debt as well.

Speaker 1 (08:54):
Fast, really fascinating stuff this morning, as we talked with
Nathan and Tom Plumb of course of Wisconsin Capital and Management,
really timely information this morning. If these are the type
of things you've had questions about maybe you could be
personally affected by the by the changes at Exact Sciences,
a great day to learn more about Wisconsin Capital Management.
Of course, make that first contact. If you head on

(09:15):
over to whiz cap dot com that's wu I s
c ap dot com. You can start that conversation and
make it real easy to do right online, no pressure
conversation again, you can start that chat at whiz cap
dot com. That's wu I s c ap dot com.
And Tom, you know, I think about about you know,
things like this, and as we kind of as Nathan

(09:37):
was explaining, it seems like a really nice fit between
the two companies, very little significant overlap. But it is
a reminder that as as things change, plans can change,
it's always important to have a backup plan in place
for yourself, things like emergency funds and other things. It's
an important time right now to be to be to
thinking about those. It's kind of an important reminder to

(09:59):
have that emergency fund in place, isn't it.

Speaker 2 (10:01):
Well, there's two things, Sean. One is that the people
who are directly impacted by this Exact Sciences, as Nathan said,
they'll learn more about their PDO policy. The HR policies
vacation retirement plans as they change. It means also means

(10:21):
that the plans that they have had will be changed.
They typically are not going to be held separate and
a company like Abbott doesn't have extremely different policies between
their different divisions. They want to make sure that people
are treated the same and that there's not an issue
between divisions. But the other thing that does come to

(10:45):
mind is that this is going to be an all
cash transaction, which means that there's going to be significant
capital gains for people who hold these shares in their
personal accounts. Now, if they're in your IRA or your
retirement plan, that's a whole different thing because they are
not taxed by the transaction. But if this does settle

(11:08):
by June thirtieth, for example, which they're shooting for, that
means that there's going to be some real tax considerations
for people who own these shares. As what we're seeing
right now with a lot of our clients where the
stock market hits an all time high, there are a
lot of people who have significant unrealized capital gains and

(11:33):
they may have a triggering event that they want just
to diversify their portfolio. Or they may be forced into
a triggering event like Exact Sciences, where now no matter
what they would prefer doing to defer their capital gains,
they're not going to have a choice. And so having
a strategy about how to address that, what your tax

(11:56):
implications are, that's going to be very, very important for
the shareholders of Exact Sciences. But we also see that
it's an overlap with our clients that own certain stocks
that maybe are up sixteen one hundred percent in the
last five years.

Speaker 1 (12:12):
Really great context and of course information this morning as
we talk with Tom and Nathan Plum from Wisconsin Capital
Management online whizcap dot com. That's wiscap dot com. Great data,
start that conversation. They make it really easy to do
at Wisconsin Capital Management and start that no pressure conversation
right online wiz cap dot com, that's wiscap dot com.

(12:33):
Talk with Tom Andate a little bit more about things
like your four oh one k or stock options. What
happens with all of that stuff. We'll get the details
from Tom Andate.

Speaker 3 (12:41):
We will do that.

Speaker 1 (12:42):
Next as asked the experts with Wisconsin Capital Management. Continues
right here on thirteen ten WIBA.

Speaker 3 (12:59):
Thirteen ten U I b A and ask the experts.

Speaker 1 (13:01):
Talking this morning with Tom and Nathan Plum from Wisconsin
Capital Management. Tom Plum is a chartered Financial analyst. Nathan
Plum is a Certified Trust Financial Advisor within an executive
m b A. Talking this morning about at the acquisition
of Exact Sciences by Abbot Labs and what that means
and a lot of folks of course wonder about their

(13:23):
four oh one k is what happens with those four
oh one k's and what do folks need to know
when it comes to different options out there? Nate, what
are what are some of the things that should probably
be on folks radar at this time?

Speaker 4 (13:34):
Yeah, So what Abbott Lab will eventually do is anyone
that's in a four one K plan at Exac Sciences,
which you know has been you know they're a good,
good provider, good employer, and have great four one K plan,
They're going to say that give you some options. One
is like do you want to roll your four one
K into Abbot's plan? Right, There'll be one choice that

(13:56):
you have, so then essentially Exac's plan will become abb
Its plan. And it's also Abbott has a good company
and you know usually these large companies have very nice
retirement packages. The second thing you do, and probably the
smartest thing you could do, is once the they ask
you to roll the money out, you can roll it
over to what's called the rollover IRA. So that way

(14:19):
you get to choose an financial advisor, or you could
do yourself. They could roll it into an IRA, and
that way you can choose all the investment choices that
are available in the investment universe. In the for one K,
they're often very restricted to what they have and so
if you're just in like a target date fund, exact sciences,

(14:41):
it might be time to look at something else and
have a professional look at that and you know, see
if we could one hopefully get your fees down and
two hopefully get you a little you know, some better
investment choices. So there's a you know, thousands out there,
you know, but no, go ahead.

Speaker 1 (14:58):
I was going to say, as you talk about some
of this stuff too, is some of it has to
do with kind of what your strategy is, is kind
of what your what your personal next steps are as well.
I'm gonna guess do you plan on staying with the
new company or do you plan on looking for new work.
I think some of that also may affect some of
your planning or am I off on that?

Speaker 4 (15:15):
Nate this one. Everyone will have this choice, so the
exact plan will go away. So if you do nothing,
you know they'll they'll try to force you out. And
if you only have a little money a plan like
in five thousand dollars or something like that, they might
actually send you a check. And those are actually people
need to be very concerned because you only have sixty

(15:35):
days to put that into an IRA, So yeah, don't
buy anything with that to just make sure that you
talk to someone like us. So we want to make
sure that no one falls through the cracks here locally
because we care about everybody.

Speaker 3 (15:47):
Really good alert and perspective for sure.

Speaker 1 (15:50):
Talking this morning with Nathan and Tom Plumb of Wisconsin
Capital Management online whiz cap dot com. That's Wi s
c ap dot com. So what about stock options, rsu's espps,
What do we need to get into on those and
what should folks be aware of in those situations.

Speaker 4 (16:07):
Yeah, when you work for a publicly traded company, it's
very common to have something called an RSU, which stands
for a restricted stock unit, and then there's another term
that you might run in for is a ESPP or
an employer or sponsor stock purchase plan, so employees can last.

(16:28):
The second one, the e SPP, you can actually buy
company stock at a discount to the market value. So
in Exact Sciences case, that was fifteen percent, but it's
usually common between five and fifteen percent. You can get
that stock there. So jumping back to r SUS, so
usually the company kind of wants you to stay around

(16:51):
and if the company is successful that you both get
to benefit. So that's why people have what's called restricted
stock units. I mean it's usually from when you're employed.
It also depends on your position. But those restricted stock units,
since this is an all cash deal, will get fully
text on September thirtieth. They're once at close so you

(17:15):
can expect and those stock options. Remember our W two income,
so they're like a bonus or your wage. And so
if you have a lot of these RSUs AD Exact Sciences,
you could have kind of a ticking text pahambre in
front of you. So it's important to get in front
of people like US or your account just to say, hey,
you know, what are some strategies I could do to
hopefully mitigate this in the future, so because you might

(17:37):
want to take some money this year, so you want
to have you know, a big tax bill next year
for example.

Speaker 1 (17:43):
Planning so important with all of this stuff, as we're
talking this morning, for folks that are effective, whether directly
or indirectly by the recent acquisition of Exact Sciences or
the ongoing acquisition of Act Science Exact Sciences by Abbot.
And and obviously anytime there's there's chain engine the corporate
world or in any business world, there can be changes

(18:03):
and employment. And I know sometimes folks are are unfortunately
part of the cycle let go, and sometimes they are
offered a severance. Are there are there things that people
need to be aware of if they if they are
offered some type of cash severance or some type of
other type of compensation on their exit. What's kind of
the what's kind of the thinking there and what should

(18:23):
people be looking out.

Speaker 4 (18:24):
For right Well, it doesn't have to be quite another.
Some of these sciences a sex science, feel varies very
good workers and I'm sure other companies will love to
poach them. So it's not the worst case scenario either,
But good to back your question. So, yeah, So they're
going to give you what's called the severance package, so
HR will contact you. They get this really long booklet
that's hard and confusing. I recommend talking to someone like

(18:47):
us so we are seeing these work all through them
offin and we can give you some some good advice there. Uh.
The key thing also is healthcare changes, right, so you
have you have your different healthcare options at Exact Science
is so get a range of plans they could have.
If you join exac advit Labs, they had their own plan.

(19:07):
But if you end up leaving, you have to make
a decision, right, so either if you're going to work
by yourself or you have to kind of set up
your own health care plan. And then also if you
are given a seventh program, the government cover yous for
a while, and that has a strange name called Cobra
a spelled co b ra, and so the government pays

(19:29):
for your health insurance for a short amount of time.
But traditionally that is very expensive, so usually want to
try to find your own health insurance or another are
jump on another company's health insurance right away. So that's
the key thing. Thirdly, the four to one gay rollover, right,
it's usually best to roll that over to h rollover IRA.

(19:50):
Pick your investment choices and that will cater you to
your specific needs. So how old you are, what's your tolerance,
et cetera. So a lot of things we looked like
at that and then you know what to do with
your stock payout. You have those restricted stock units. We'll
be fully vested on June thirtieth of twenty twenty six.

(20:10):
Again that's W two income, So that could be if
you try to avoid jumping a task bracket. We could
hopefully help you out there and you know, do just
you know, in general, just help with your taxes, just
make sure you're doing things efficiently, like you know, it
might be a great time to go into ROTH or
at your kids five twenty nine plans. So we're all

(20:31):
encompassing and essentially that's the kind of the process that
we would take you through here.

Speaker 1 (20:36):
It's a really it's a and it's a I think
for a lot of folks as we talk about this stuff,
it's a time where you definitely want to be very
much engaged. You want to have a good partner on
your side as well, and it's a great day to
start that relationship. I know, Tom and Nathan would love
to get to know you. You head on over to
the website whiz cap dot com. That's wis cap dot com.
You can start a no pressure conversation right online, right

(20:58):
on the website. There's a chat bubble there. You can
start that conversation right at wizcap dot com. That's wi
scap dot com. And before we wrap up this week,
just kind of I know, one of the things we
like to is kind of get an overview of this
week's conversation.

Speaker 3 (21:12):
Any final advice for folks for.

Speaker 1 (21:14):
Exact sciences for their employees, things that they should be
thinking about right now.

Speaker 4 (21:20):
I think that it's a great acquisition. I think it
makes sense. It really helps to have a a acchoir
that's based in the Midwest because use those Midweest Midwestern
ethics kind of go through. But it will be a
bigger company. You know, Zach Science is a big company
in medicine. You know abbits there and it's uh, you know,
you should congratulate yourself. You did a great job, and

(21:41):
you know they will probably wanted to keep doing a
great job. Abbot Resources had it's a big international reach,
so there's huge that's probably one of the reasons they
bought Exact Sciences to extend their global reach, so there
could be a lot of opportunities. You know, it's a
very exciting time for Exact Sciences, So we just want
to make sure that's your going with open eyes and

(22:01):
make sure you're not surprised.

Speaker 1 (22:03):
And I love that you point out that these are
opportunities and it's a great day to be taking advantage
of opportunities. Anytime, if there's change in your life, there's
a chance to make things better. And it's a great
day as we talk about improving your overall position. Great
day to start that conversation working with a great team
and great partners with the folks at Wisconsin Capital Management.
You haven't been to the website yet, Urgent to head
on over there wiz cap dot com. That's wis cap

(22:26):
dot com. You can learn more about Wisconsin Capital Management.
You can also start a no pressure conversation right online.
That's wiz cap dot com. That's wis cap dot com. Nate, Tom,
it was great chatting with both of you guys this week.
You enjoy us, beautiful Dan and we'll do it all
again real soon, wonder Sean, see you guys, see it
Tom cnaight, and of course we've got news next here

(22:48):
on thirteen ten wuib A