US and Canadian anti-trust regulators conditionally approve Abbott-Alere merger

US and Canadian anti-trust regulators yesterday approved Abbott Laboratories' acquisition of Alere Inc on condition that it sell two point-of-care medical testing businesses.

Abbott first offered to buy Alere in February 2016, but the deal ran into trouble because of issues related to the diagnostic maker's accounting and sales practices. The company finally agreed to buy Alere in April for about $5.3 billion, down from an initial $5.8-billion offer.

The US Federal Trade Commission (FTC) yesterday said that Abbott and Alere have agreed to divest two point-of-care medical device products line in order to settle FTC charges that Abbott's proposed acquisition of Alere will harm competition.

In February 2017, Abbott agreed to buy Alere, which would have made it the world's premier point of care testing business and expanded its presence in diagnostics. (See: Abbott to buy rapid diagnostic testing provider Alere for $5.8 bn)

After the deal was announced, the US Department of Justice served Alere two separate subpoenas based on its investigations into the company's sales practices and patient-billing records related to Medicare, Medicaid and Tricare.

Alere also delayed filing its financial statements for six months and disclosed probes into billing and foreign sales practices. Abbott tried to call off the deal in early April saying that Alere misrepresented while negotiating the merger agreement (Abbott seeks to terminate $5.8-bn acquisition of Alere).

Later both companies decided to end legal battles and agreed to take back their respective lawsuits and go ahead with the transaction but at a lower price.

Under the terms of the new deal agreed by both companies, the deal value come down to $5.3 billion, down from an initial $5.8 billion (Abbott, Alere agree to end legal battles, to go ahead with merger at lower price).

The FTC had said that the proposed acquisition would result in market concentration and likely harm competition in the US for the sale of two types of devices - point-of-care blood gas testing systems and point-of-care cardiac marker testing systems.

Under the terms of a proposed, both companies will divest Alere's blood gas testing system to Siemens Aktiengelsellschaft, and Alere's cardiac marker testing system to Quidel Corporation.

Both companies will also divest Alere's two Ottawa, Canada facilities to Siemens, and Alere's San Diego, California facility to Quidel.

The settlement requires them to complete the divestitures to Siemens and Quidel within 30 days after the proposed acquisition is finalised.

Alere also agreed to pay more than $13 million to resolve the US Securities and Exchange Commission charges that it committed accounting fraud and made improper payments to foreign officials.

The proposed acquisition comes a year after Abbott agreed sell its medical optics division to Johnson & Johnson for $4.3 billion, and purchased St. Jude Medical for $25 billion.

With annual sales of $2.5 billion, Alere makes tests for infections such as HIV, tuberculosis, malaria and dengue.

Its tests, which are fast, easy-to-use and cost-effective, are focused on the areas of infectious disease, molecular, cardiometabolic and toxicology. The company has carried out more than 1.4 billion tests at the point of care in 2015.

Alere also develops simple, rapid tests, including Alere i, the first molecular CLIA-waived test for flu and strep that provides results in less than 15 minutes.

More than half of Alere's $2.5 billion in sales are generated in the US, which also is about 10 per cent of Abbott's total diagnostic sales of $4.6 billion last year.