The acquisition will bolster Abbott's point of care diagnostics business and provides evidence that, like 2015, this year could shape up to be another big year for medtech M&A activity.
Abbott Laboratories has announced that it will acquire the diagnostic firm Alere (Waltham, MA) for $5.8 billion, a move that would bolster Abbott's point-of-care diagnostic business, giving it projected total diagnostic sales of $7 billion annually.
The company makes diagnostics for a variety of infectious diseases, including HIV, dengue fever, tuberculosis, and malaria.
Abbott will pay roughly $4.8 billion, or $56 per common share, for Alere's common stock. The remaining $1 billion will be used to pay for restricted stock units, options, and preferred shares, according to the Wall Street Journal.
As of last Friday, Alere's business was worth some $3.2 billion.
The news caused Alere's stock to skyrocket. By 2:00 p.m. ET on February 1, the stock had increased in value by some 45% to $54 after having closed at $37.20 on Friday. By contrast, Abbott's stock was roughly flat.
The acquisition would give Abbott an expanded portfolio of benchtop and rapid diagnostic strips.
The diagnostic business is projected to be strong in coming years. Now valued at $60 billion internationally, the field of diagnostics is growing at a rate of approximately 5% per year according to Goldman Sachs.
It is also expected to yield $500 million in savings by 2019 as a result of sales and operational streamlining.
The company Danaher Corp. had also bid for Alere, according to Canaccord Genuity analyst Mark Massaro.
Alere's leadership had succeeded in significantly driving up the valuation of the company's stock since 2012 and 2013, when it was worth in the ballpark of $20 and $25 per share.
In 2013, activist shareholders had advocated for ousting Alere's board amidst poor stock results in the second quarter of that year.
The company's board had forced out the company's M&A-hungry founder and chairman Ron Zwanziger and hired a new chairman. Late year, the company turned down a takeover offer from Zwanziger, who owned nearly 5% of the company.
The day after the Abbott-Alere deal was announced, news came out that Abbott will also acquire steerable sheath company Kalila Medical (Campbell, CA) for an undisclosed sum.
Learn more about cutting-edge medical devices at MD&M West, February 9-11 at the Anaheim Convention Center in Anaheim, CA.
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