Abbott, Alere agree for $5.3 billion deal

Bloomberg

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. 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. 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.
The renegotiated price was better than many on Wall Street expected, said Jeff Jonas, a portfolio manager at Gabelli & Co. Recent decisions in the court case tipped in Alere’s favor and helped them get a better deal, he said. Those included a recommendation that Abbott turn over documents that Alere said proved the company knew what it was getting when it agreed to a deal.
With the legal actions dropped, Abbott must now integrate Alere’s industry-leading point-of-care technology while navigating the company’s raft of US 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 US Medicare program over the future of its diabetes products division.