Abbott painted a rosy future in February, when it announced it would build the “world's premier point of care testing business” through a $5.8 billion acquisition of Alere. But the deal has gone sour, with Abbott trying to get out of it due to federal investigations into the diagnostics maker and Alere filing a lawsuit last week in a bid to compel Abbott to deliver on their agreement.
In the lawsuit, unsealed Wednesday, the companies exchanged blows, with Alere accusing Abbott of trying to sabotage the deal with an “endless and steady stream of unreasonable and extremely burdensome requests for both documents and interviews of Alere personnel,” Bloomberg reported. Abbott retaliated, declaring that Alere was less than forthcoming on its foreign corruption investigations.
Abbott claimed Alere did not hand over information required as part of the merger agreement about its foreign business dealings that are currently under bribery investigations, Bloomberg reported. But Alere maintains that, after furnishing Abbott with almost 1 million pages of documents and 33 employees for adversarial interviews, it found it had not breached any condition of the merger, Bloomberg reported.
“Their description of the events is fiction and nothing but a publicity stunt,” Abbott spokesman Scott Stoffel said in a statement Wednesday, as quoted by Bloomberg. “Abbott is compliant with its obligations under the merger agreement.” Meanwhile, Abbott was aware that Alere’s alleged wrongdoing in India had been investigated and found to be false, said Alere spokeswoman Jackie Lustig, as quoted by Bloomberg.
Alere filed the lawsuit in Delaware Chancery Court last week. At the time, it told shareholders in a statement that it was seeking to “compel Abbott to fulfill its obligations under the terms of the merger agreement to take all actions necessary to promptly obtain all required anti-trust approvals.”
Since the announcement of the acquisition in February, Abbott has offered as much as $50 million to the diagnostics player to terminate the deal--which was rejected by Alere’s board--and brought in auditors to scrutinize Alere’s books. Despite Abbott’s “serious concerns” over the financial information Alere provided as part of the merger agreement, Alere said in June that it expected the deal to close as planned. Alere’s stock has been floating below the $56-per-share price that Abbott offered, but took a dive on the news of the lawsuit and is continuing to fall.
Abbott is also trying to acquire St. Jude Medical for $25 billion. It announced the deal in April to skepticism: Credit rating agency Moody’s threatened to downgrade Abbott’s rating because of the amount of debt it would have to assume to pull off both deals.