At $22 per share, the deal amounts to a nearly 150 percent premium for AMO shares, which closed on Friday at $8.85. However, AMO stock traded at $24.90 in June.

AMO shares surged to $21.54 in premarket trading, while shares of Abbott fell 12 cents to $51.05.

Santa Ana, California-based AMO is the world's largest player in surgical devices for LASIK laser vision corrective procedures, according to the companies. It ranks No. 2 in the cataract surgical device market and No. 3 in contact lens care products.

But the weak economy has hurt demand for its eye-surgery business, pressuring AMO profits and shares. The company said in November it would reduce its workforce by about 190 positions, or about 5 percent, as it cuts costs.

Including $1.4 billion in debt, Abbott values the transaction at about $2.8 billion.

Before one-time costs tied to the deal, the suburban Chicago-based drugmaker expects the transaction to be neutral to ongoing earnings per share in 2009, and add to earnings beginning in 2010.

Abbott and AMO expect the transaction, which was approved by both companies' boards, to close in the first quarter of 2009.

Abbott also forecast 2009 earnings of $3.65 to $3.70 per share, reflecting growth of at least 10 percent.

Before the deal was announced, analysts on average had been looking for $3.67, according to Reuters Estimates.

Abbott also backed 2008 earnings forecast of $3.31 to $3.33 per share, excluding specified items.

(Reporting by Lewis Krauskopf and Edward Tobin, editing by Dave Zimmerman)