Abbott has been squirming for months over its Alere acquisition, even offering the diagnostics maker $50 million to exit the deal. Now, Abbott is putting its foot down, filing a complaint to terminate the deal once and for all.
The devicemaker filed in Delaware Chancery Court to terminate its proposed acquisition of Alere due to a “substantial loss” in value since the pair inked the merger agreement in February. Barely two months later, Alere said it had rejected Abbott’s $50 million breakup offer and in August, the diagnostics maker sued Abbott, also in Delaware Chancery Court, to try to force the deal’s completion.
So why has Abbott finally taken a firm stand? Since February, a string of “damaging business developments” has unfurled, making the company an undesirable target. Alere has been the subject of multiple federal probes, including one into its foreign business practices. Alere stock took a hit last month when the Centers for Medicare & Medicaid Services suspended the billing privileges of its Arriva Medical unit for submitting claims for 211 deceased patients.
Alere has been served with multiple new subpoenas from the government, including two new criminal subpoenas. It was also five months late in filing its 10K and had to restate its financials from 2013 to 2015 thanks to “internal control failures,” Abbott said in a statement. In July, Alere recalled a monitoring device for patients who take Xarelto, a blood thinner. The recall could end up costing the company as much as $90 million, Bloomberg reported at the time.
"Alere is no longer the company Abbott agreed to buy 10 months ago," said Scott Stoffel, divisional vice president of external communications at Abbott, in the statement. "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."