Abbott, Alere agree to end legal battles, to go ahead with merger at lower price
15 Apr 2017
Diversified healthcare company Abbott Laboratories yesterday decided to end legal battles rapid diagnostic testing company Alere Inc, and agreed to buy it but at a lower price than it had earlier offered.
Abbott and Alere yesterday said that the companies had agreed to take back their respective lawsuits and go ahead with the transaction.
Under the terms of the new deal agreed by both companies, Abbott will now pay $51 a share, down from the original offer of $56 a share.
The value of the deal has now come down to $4.44 billion from the earlier value of $5 billion.
The new revised offer represents a 21 per cent premium to Alere's Thursday closing price of $42.31 per share.
In February, 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. The company lost reimbursement on its Medicare business.
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 April saying that Alere misrepresented while negotiating the merger agreement.
In July, the US health regulator forced Alere to recall a device used to monitor levels of a widely used blood thinner because it was found to generate faulty results.
The following month Alere sued Abbott to force it to obtain US antitrust approvals required for completing the merger, and in December, Abbott filed a complaint to terminate the deal due to a "substantial loss" in the value of the Alere since the merger agreement was signed.
"Alere is no longer the company Abbott agreed to buy 10 months ago," Scott Stoffel, divisional vice president of external communications of Abbott had then said.
"These numerous negative developments are unprecedented and are not isolated incidents brought on by chance. We have attempted to secure details and information to assess these issues for months, and Alere has blocked every attempt. This damage to Alere's business can only be the result of a systemic failure of internal controls, which combined with the lack of transparency, led us to filing this complaint."
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.