Abbott To Acquire Alere

BLOOMBERG NEWS

Abbott Labs to Acquire Diagnostics-Testing Company Alere - Abbott Laboratories agreed to acquire diagnostic-test company Alere Inc. for $5.8 billion, a deal Abbott expects will make it a leading provider of point-of-care testing.

Alere shares soared 45% to $54.11 in New York, reflecting the deal price of $56 a share, a 51% premium to Friday’s close. Abbott also said Alere’s net debt, currently about $2.6 billion, would be assumed or refinanced by Abbott.

Following the deal, Abbott said its total diagnostics sales would exceed $7 billion. Abbott shares gained 1.6% to $38.45.

The deal comes days after Abbott reported its profit fell 15% in the final quarter of the year, as the stronger dollar weighed on its results in emerging markets. The company also issued annual guidance sharply below Wall Street expectations.

On the company’s conference call Thursday, Abbott Chief Executive Miles White sounded pessimistic about making near-term acquisitions, particularly in emerging markets.

Abbott said Monday that more than half of Alere’s $2.5 billion in annual sales are in the U.S.

Abbott said the deal would expand its platforms to include benchtop and rapid strip tests. The company expects the transaction will boost its per-share earnings immediately upon closing, raise its per-share profit by 12 cents to 13 cents next year and provide a boost of more than 20 cents a share in 2018.

The combined company is expected to see pretax savings of $500 million a year by 2019, with more sales and operational benefits afterward

Last month, Alere said fourth-quarter revenue would miss estimates as it faces foreign-exchange headwinds and a quiet North American flu season. For 2015, analysts expect Alere to report revenue of $2.49 billion, according to Thomson Reuters.

Abbott reported sales of $20.4 billion in 2015, up 0.8% from the previous year.

Under the deal, Abbott will pay about $4.8 billion for Alere’s common stock, with the rest of the deal covering restricted stock units, options and preferred shares.

J.P. Morgan Chase & Co. is acting as financial adviser to Alere, and Cravath Swaine & Moore acted as legal adviser. Evercore and Kirkland & Ellis LLP acted as advisers to Abbott.