Abbott and Alere Abandon Litigation and Reach New Terms for Acquisition

Abbott's deal to acquire Alere is back on. Both companies announced Friday, April 14, 2017, that they will move forward with the deal and have revised its terms. Abbott, a global health care company with a significant diagnostics business, had originally announced a plan to acquire Alere in February 2016. The parties were embroiled in lawsuits, however, after Alere became the subject of government subpoenas and Abbott sought to exit the deal. The formerly $5.8 billion transaction now is estimated to have a $5.3 billion equity value, with Abbott paying $51 per common share of Alere rather than the original $56 per share.

At the time the deal was initially announced in 2016, Alere Chief Executive Officer Namal Nawana declared in a statement: "Our leading platforms and global presence in point-of-care diagnostics, combined with Abbott's broad portfolio of market-leading products, will accelerate our shared goal of improving patient care."

"The combination of Alere and Abbott will create the world's premier point of care testing business and significantly strengthen and grow Abbott's diagnostics presence," added Miles D. White, Abbott's chairman and chief executive officer in the same statement. "We want to offer our customers the best and broadest diagnostics solutions. Alere helps us do that."

Alere, which specializes in in vitro tests for influenza, hospital-acquired infections, toxicology and cardiology, received FDA 510(k) marketing clearance earlier this month for a rapid flu test for point of care and laboratory use. The Alere™ Reader "is the first rapid antigen influenza test to achieve 510(k) clearance as a Class II assay under the new FDA reclassification requirements," according to Alere's statement announcing the FDA approval. Additionally, the FDA is considering what would be the first approved POC HbA1c diagnostic test for diabetes in the US. Alere's Afinion HbA1c Dx would be considered a moderate-complexity test, i.e., labs would have to perform proficiency testing and follow other quality controls.

Before the acquisition can be completed, regulatory approvals will still need to be secured and Alere shareholders must approve the terms of the deal. If those approvals are secured, the deal is expected to be completed by the end of the third quarter in 2017. As part of the terms, both Abbott and Alere have agreed to drop their lawsuits against each other. You may recall that in December 2016, Abbott sought to have a Delaware Chancery Court let it out of the deal, claiming that Alere has lost "substantial value." Alere had filed litigation to move the deal forward and force Abbott to pursue regulatory filings needed for the deal. Earlier in 2016, Abbott had tried to negotiate an exit, offering Alere between $30 million and $50 million to call it off but Alere refused.

Takeaway: Abbott's planned acquisition of Alere will move forward after the parties have resolved litigation over whether to proceed with the deal.