Abbott May Leave Alere at the Altar

Nancy Crotti

May 2, 2016

2 Min Read
Abbott May Leave Alere at the Altar

Alere directors rejected the larger company's multi-million-dollar payoff offer to kill the deal. Abbott said it has enough money to buy both Alere and St. Jude Medical, but its CEO was noncommittal about Alere.

Nancy Crotti

Alere now says Abbott Laboratories has offered to break off its $6 billion proposed takeover of the smaller company, citing "serious concerns."

Abbott offered $30 million to $50 million to cover Alere's costs, according to a statement from Alere. Alere's board of directors rejected the offer.

In March, Alere revealed that it had received a grand jury subpoena from U.S. Department of Justice, related to its sales practices for 2013 through 2015 in Asia, Africa, and Latin America, and to matters related to the U.S. Foreign Corrupt Practices Act. Alere then said that it would be delaying its 2015 annual report.  

"Abbott informed Alere that it has serious concerns about, among other things, the accuracy of various representations, warranties, and covenants made by Alere in the parties' merger agreement," Alere said in a statement. "Abbott indicated that these concerns relate to the delay in filing the 2015 Form 10-K and governmental investigations previously announced by Alere."

Abbott did not immediately respond to a request for comment.

Alere also said that its lender had approved the company's extension to file its 10(k) with the SEC.  The company said it plans to hold a special stockholders meeting to approve the merger and issue its Q1 2016 report shortly after it files the 10(k).

After Abbott CEO Miles White gave a noncommittal response to an analyst's question about the Alere deal last week, he told CNBC that Alere is "working through its issues," but declined to comment further.

Abbott announced the deal in February, saying that it intended to acquire Alere for $56 in cash per share. Last Thursday, Abbott saidit would buy St. Jude Medical for $25 billion, and that it had the wherewithal to complete both deals.

White had initially originally called the Alere acquisition "'a very compelling strategic opportunity' for Abbott," Morningstar analyst Debbie Wang recalled last week. "This does raise questions about Abbott's commitment to closing the deal." 

Nancy Crotti is a contributor to Qmed and MPMN.

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About the Author(s)

Nancy Crotti

Nancy Crotti is a frequent contributor to MD+DI. Reach her at [email protected].

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