Johnson & Johnson has signed a definitive agreement to acquire Abbott Medical Optics (AMO), a wholly owned subsidiary of Abbott Laboratories, for $4.32bn in cash.
AMO posted sales of $1.1bn in 2015.
The acquisition will include ophthalmic products in three business segments including cataract surgery, laser refractive surgery and consumer eye health.
Johnson & Johnson vision care companies group chairman Ashley McEvoy said: "Eye health is one of the largest, fastest growing and most underserved segments in health care today.
"With the acquisition of Abbott Medical Optics' strong and differentiated surgical ophthalmic portfolio, coupled with our world-leading ACUVUE contact lens business, we will become a more broad-based leader in vision care.
“Importantly, with this acquisition we will enter cataract surgery, one of the most commonly performed surgeries and the number one cause of preventable blindness."
AMO is an important player in ophthalmic surgery and is known for intraocular lenses used in cataract surgery.
According to the World Health Organization estimates, approximately 20 million people are blind from age-related cataracts and there are at least 100 million eyes with compromised visual acuity caused by cataracts. These numbers are rising due to population growth and increasing life expectancy.
Besides the cataract business, AMO has advanced laser vision (LASIK) technologies designed to enhance surgeon productivity and correct near sightedness, far sightedness and astigmatism.
The deal also includes AMO's consumer eye health products such as over-the-counter drops for dry eyes, as well as multipurpose solutions and hydrogen peroxide cleaning systems for patients wearing contact lenses.
The transaction is expected to complete in the first quarter of 2017 following regulatory approvals.