Abbott Asks Court to Pull the Plug on Alere Merger

Abbott officially wants out of its $5.8 billion merger with Alere. Last week, the Illinois-based diagnostics giant asked a Delaware Chancery Court to let it out of the deal, claiming that Alere is no longer the company it agreed to acquire back in February. According to Abbott’s official statement, Alere has lost “substantial value” as a result of a series of business setbacks—loss of billing privileges, government subpoenas, recalls, etc.

This is the second time Abbott has bolted for the exit. In April, Abbott offered Alere between $30 million and $50 million to call off the deal. (See LIR, May 19, 2016). Alere rejected the buy-out and demanded that Abbott consummate the deal.

Things soon got ugly. Frustrated by what it perceived to be Abbott’s foot-dragging in securing Federal Trade Commission antitrust clearance, Alere escalated in August by filing a lawsuit to force Abbott to carry out the merger agreement. The Delaware Chancery Court asked the sides to mediate but on Sept. 28, the talks broke down without a resolution. On Nov. 3, Abbott fired back, suing Alere for breach of contract. And now Abbott is asking the courts to pull the plug.

But Alere stubbornly refuses to go away, claiming that nothing in Abbott’s lawsuit justifies terminating the deal and expressing confidence that the merger will proceed under the terms of the February agreement. Clearly, though, it is going to take a loaded shotgun to bring Abbott to the altar.

Meanwhile, we are hearing whispers that fallout from the Alere imbroglio may be compromising Abbott’s strategic position and ability to do other deals by making other potential targets wary. See LIR, Nov. 25, 2016.