Originally priced at $5.8 billion when it was announced in February 2016, the deal ran into trouble right out of the gate as a string of setbacks befell Alere. By December 2016 Abbott had sued to stop the merger , citing a “substantial loss in Alere’s value” due to “a series of damaging business developments.”
Today the companies said the new terms of the deal call for Abbott to pay $51 per share, representing a -8.9% haircut but still a 21% premium on Alere’s $42.31 closing price yesterday; the new deal is worth about $5.3 billion, they said. Earlier today the Financial Times reported that the new deal was worth about $4.4 billion, citing people close to the matter.
The merger is slated to close by the end of the 3rd quarter, Abbott and Alere said. The amended terms of the deal also extend the deadline for winning the necessary regulatory approvals from April 30 to Sept. 30, they said, noting that they’ve also buried the hatchet on lawsuits each has filed over the deal.
Anti-trust regulators in the European Union approved the merger in January, contingent on Abbott selling some of Alere’s Epoc and Triage tests and its BNP reagents business. Abbott also agreed to sell plants in Ottawa and San Diego to mollify the European Commission.
Soon after the deal became public last year, Alere received a subpoena from the U.S. Justice Dept. seeking documents on its dealings with 3rd-party distributors and foreign healthcare officials, and the company said it wouldn’t be able to meet the deadline for reporting its 2015 results. By April 2016 Alere had rejected a $50 million offer from Abbott to spike the merger; last July the DoJ initiated another probe into Alere’s billing practices for pain management payments from government insurance programs.
Alere sued Abbott last August, looking to force its would-be acquirer to obtain all antitrust approvals required to complete the acquisition. In early September, a Delaware state court put the lawsuit on the fast track and urged the companies to try and talk things out; an attempt at mediation failed later that month.
Abbott filed a counter-suit in December 2016, the same day that the Centers for Medicaid & Medicare Services revoked enrollment for Alere’s Arriva diabetes division after finding that it submitted claims for 211 deceased patients.
“The renegotiated price is in the realm of investor expectations and seems to reflect the impact from some of the challenges witnessed in Alere’s business over the last 12 months,” Raymond James analyst Nicholas Jansen told Reuters.
Alere has also delayed filing its 2016 annual report and has not yet fixed material weaknesses with respect to its revenue recognition practices disclosed in its 2015 annual report.
“We think the new merger agreement now includes all of the known issues that have developed so would not expect any risk to the future of the deal unless something else emerges as of today’s date,” Jansen said.
Material from Reuters was used in this report.