December 9, 2016
By Alex Keown, BioSpace.com Breaking News Staff
WALTHAM, Mass. – Abbott Labs no longer wants any part of diagnostic-testing company Alere .
Alere is facing issues that caused Jen Wieczner to call it “the new Theranos” in a Forbes article. Wieczner compared Alere to the troubled California-based startup helmed by Elizabeth Holmes that is also facing a mountain of scrutiny and legal troubles.
Earlier this week the Illinois-based company filed a complaint to abort its $5.8 billion bid to acquire Alere. In the complaint, Abbott said Alere “has suffered a series of damaging business developments” and is no longer the company that it sought to acquire. Specifically, Abbott cited billing incidents that caused Alere’s diabetes unit, Arriva Medical, to be removed from Medicare. Abbott also raised concerns over the recall of a product, the delay in filing its form 10-K with the U.S. Securities and Exchange Commission and investigations into its business practices by the U.S. government.
“These numerous negative developments are unprecedented and are not isolated incidents brought on by chance. We have attempted to secure details and information to assess these issues for months, and Alere has blocked every attempt. This damage to Alere’s business can only be the result of a systemic failure of internal controls, which combined with the lack of transparency, led us to filing this complaint,” Scott Stoffel, Abbott ’s divisional vice president of external communications, said in a statement.
Abbott’s filing this week is not the first time that company has publicly had reservations about acquiring Alere. At the end of October, Abbott filed a breach of contract lawsuit against Alere regarding documentation the company said has been withheld ahead of the merger. In an SEC filing, Alere alluded to legal action the company was taking against Abbott over the deal, including an August claim that Abbott was failing to comply with its obligations set forth in the merger agreement related to antitrust approvals.
Abbott’s latest filing caused shares of Alere to drop more than three points. The stock fell from $39.70 per share to $36.75 per share. The stock has climbed back up a little bit to trade at $37.14 per share this morning.
On Thursday Alere representatives said Abbott’s latest lawsuit is without merit and said none of the issues Abbott has raised “provides it with any grounds to avoid closing the merger.”
“Alere has fully complied with its contractual obligations under the merger agreement and is highly confident that the merger will be completed in accordance with the terms set forth in the merger agreement. Alere will take all actions necessary to protect its shareholders and to compel Abbott to complete the transaction in accordance with its terms,” the company said in a statement.
In February, Abbott struck the deal with Alere with Alere to allow the company to “provide new, flexible, cost-effective, high-quality products to help health systems meet growing demand in both in-patient and out-patient settings.” At the time the company said Alere’s portfolio of products will provide the company entry into new outlets, including doctors’ offices, clinics, pharmacies and at-home testing. Abbott said its combination with Alere will offer the broadest point of care menu of infectious disease, molecular, cardiometabolic and toxicology testing, expanding Abbott’s platforms to include benchtop and rapid strip tests.
Since that deal was struck though, Abbott has been looking for ways to get out of the deal, especially since Abbott agreed to buy agreed to buy St. Jude Medical for about $25 billion, another medical device maker.
