The Chicago, Illinois-based diversified healthcare business Abbott Laboratories (NYSE:ABT) has agreed to purchase Alere (NYSE:ALR) for $4.48 billion. This brings to an end the prolonged legal battle over the takeover of the diagnostic-testing company. Alere Inc. is based out of Waltham in Massachusetts and makes tests for infections like malaria, dengue, tuberculosis, and HIV.
The Abbott-Alere deal is expected to close by the end of the third quarter of 2017, of course, after the Alere shareholders approve this deal, and the customary closing conditions are satisfied, which also includes applicable regulatory approvals.
Taking Over Alere a Good Move for Abbott Laboratories
Once Abbott is able to take over the business and has complete control, they will be able to expand in point-of-care diagnostic testing, which is a growing market as more and more physicians are now asking for rapid tests to speed up treatments. Also, Alere has a growing presence in many international markets, which Abbott will be able to tap into.
So, the Alere acquisition seems like a right strategic move for Abbott Laboratories.
Last February, Abbott had shown interest in Alere for the first time and made an initial offer of $56 for each share of the company. Interestingly, the deal was closed eventually at $51, which is $5 below the initial offer. However, it is still a premium of 20.5 percent over the Thursday closing price of Alere, which was $42.31.
The Court Battle Between Abbott and Alere
Abbott went to court in April 2016 after making the first offer of $5.8 billion, claiming that Alere had hidden material information about legal and regulatory problems. The transaction was in court for more than a year, as Alere disclosed subpoenas on restated earnings, bribery investigations, and recalled products. Concerns of accuracy of various warranties, representation, and covenants raised tensions between the two businesses. Abbott also proposed to pay legal costs between $30 and $50 million towards the transactions expenses of Alere, which they refused.
In response, Alere too sued Abbott, saying that they were forcing them to move ahead with the deal.
Then in December, Abbott (NYSE:ABT) filed yet another lawsuit, asking for a termination of their acquisition deal, claiming “substantial loss” in the value of Alere since the two companies had first struck a deal in February of last year.
Both the companies came together to make a joint statement on Friday, saying they have agreed to dismiss all lawsuits.