Abbot Laboratories announced on Thursday that it will buy St. Jude Medical Inc. for $25 billion, its biggest ever acquisition amidst a consolidation going in the industry as a means to gain bargaining power with medical facilities and hospitals.

Shareholders of the heart device maker will receive $46.75 in cash and 0.8708 shares of Abbott's common stock, which represents a total amount of about $85 per share, according to a company statement on Thursday.

Makers of medical devices are merging to be able to access new technology as medical facilities and hospitals demand lower prices. Last year, St. Jude bought Thoratec Corp. for $3.4 billion, enabling it to add ventricular pump devices in its product lineup. Such devices can substitute for failing hearts.

With this new Abbott-St. Jude merger, a pipeline of new medical devices will be generated across neuro-modulation, diabetes and cardiovascular patient care, according to the company statement.

Meanwhile, the announcement on Thursday of the merger has sent rumors flying in Wall Street. Some are worried that Miles White, Abbott Chief Executive is yet again laying the groundwork to split the company.

He spun the company's fast-growing branded drugs business into a new firm, AbbVie, three years ago. Shares of this company have also doubled while Abbott retained nutritionals, some generic medicines, medical devices and diagnostics.

With the present acquisition, the Chicago-based company is building a cardiovascular device division with sales of over $8 billion. White also announced two months ago that he wants to buy Alere Inc, a diagnostic company for $5.8 billion.

With these two companies under its belt, Abbott can choose to set up another spin-off in a matter of two to three years, according to some investors and analysts.

The company also said that it is financing both the St. Jude Medical and the Alere Inc. acquisition. This news sent Alere's shares higher in early trading.