Investors in the diagnostics giant, which is fighting an attempt by Abbott (NYSE:ABT) to spike their $6 billion merger, viewed a dissenting opinion in a case involving a different deal as a good sign. In that case, Williams Co. vs. Energy Transfer Equity, Delaware Supreme Court Chief Justice Leo Strine Jr. dissented with the high court’s decision that ETE had the right to spike the deal; the Delaware Chancery Court magistrate in the original Williams ruling, Judge Sam Glasscock, is also overseeing the arbitration between Abbott and Alere.
“Adjusting the manner in which the agreed-upon consideration would pass, by a modest amendment of the merger agreement, would have had no material economic effect on ETE from the terms of the deal it clearly struck,” Strine wrote in his March 23 dissent. “The Court of Chancery was of course right that ‘even a desperate man can be an honest winner of the lottery.’ But under settled contract law, when, in desperation, you breach your obligation to help a condition come about, you do not get credit for rigging the game.”
Last December Abbott sued to stop the $5.8 billion acquisition, citing a “substantial loss in Alere’s value” due to “a series of damaging business developments.”
Those include the permanent recall of a product platform, government elimination of billing privileges for an Alere division, multiple government and criminal subpoenas and a 5-month delay on its 10K filing, as well as admitting internal control failures which require a restatement of its 2013-2015 financials. (Earlier this month Alere missed the extended deadline for its 2016 annual report.)
Alere investors took Strine’s dissent as an indication that the dispute with Abbott could go their way – or at least result in a healthy termination fee – pushing ALR shares up 3.3% to a $39.13 per-share close March 23.
But Widener University professor Larry Hamermesh, a specialist in Delaware business law, told Bloomberg that ETE’s bid for a breakup fee is a stretch.
“It would really be surprising” if ETE won its bid, Hamermesh told the wire service.