Abbott agrees to buy Alere at lower price
Libertyville Township-based Abbott Laboratories agreed to consummate its troubled acquisition of Alere Inc. in a deal that values the medical test maker's equity at $5.3 billion, shaving $500 million from the original price and ending months of legal maneuvering that appeared headed for a Delaware court.
Alere shareholders will get $51 a share in cash, according to a statement Friday. While the new price is an 8.9 percent cut from the deal announced in February 2016, it's a 21 percent jump from the company's closing price on Thursday. The two parties were slated to meet in Delaware Chancery Court next week to begin hearings on Abbott's lawsuit to terminate the purchase.
The agreement brings to a close one of the medical-technology industry's most contentious acquisitions. The deal ran into problems within two months, when Alere received a grand jury subpoena related to its sales practices, and failed to file its financial results with regulators. After months of public wrangling over the transaction, each company sued the other, with Alere attempting to force the deal to go through and Abbott accusing its target of violating the terms of their agreement.
With the legal actions dropped, Abbott must now integrate Alere's industry-leading point-of-care technology while navigating the company's raft of U.S. government investigations into bribery and billing practices as well as material weaknesses in its revenue recognition and accounting for income taxes. Alere is also embroiled in a battle with the U.S. Medicare program over the future of its diabetes products division.
"It's a great outcome for Alere," said Raj Denhoy, an analyst at Jefferies. "The Alere collection of point-of-care assets is really the best out there. It has had its issues, but the core of the portfolio and the technologies are still there."
Both sides welcomed the resolution. Naval Nawana, chief executive officer of Waltham, Massachusetts-based Alere, said in an email that the amended terms "deliver value and certainty to Alere shareholders." Abbott spokesman Scott Stoffel said the deal is an "equitable settlement."
The companies expect the transaction to close by the end of third quarter, pending shareholder and regulatory approval.
Abbott Laboratories agreed to buy Alere last year to gain the smaller company's suite of diagnostic testing devices and products. At the time the two U.S. companies said that the deal would boost Abbott's diagnostics business to about $7 billion in sales after closing.
Alere's main products are used for testing blood levels, as well as diseases like the flu and HIV. They are also used for testing for drug and alcohol use. Abbott already sells the I-Stat, which can run 26 common laboratory tests in minutes using just a few drops of blood.