|Abbott CEO Miles White|
Abbott ($ABT) has avoided addressing rumors that its deal with point-of-care diagnostics maker Alere ($ALR) is on the rocks. But according to Alere, the Illinois med tech wants out.
Abbott recently offered Alere $50 million to call off the pair's previously announced $5.8 billion merger, but Alere rejected its proposal, the company said in a statement. An Abbott representative was unavailable for immediate comment, The Wall Street Journal reports.
In February, Abbott said it would buy the diagnostics maker to "create the world's premier point of care testing business" and to "significantly strengthen and grow" its testing presence, CEO Miles White said at the time.
Then, Alere ran into some problems. In March, a new report showed that the company was under investigation by federal regulators for allegedly corrupt international sales practices in Africa, Asia and Latin America.
The same month, Waltham, MA-based Alere said it wouldn't be able to file its 2015 annual report on time because it was still analyzing revenue in Africa and China for 2015, 2014 and 2013.
Abbott has "serious concerns" about Alere's state of affairs, including its delayed regulatory filing and its foreign corruption probes, Alere said in a statement. The company offered to give Alere between $30 million and $50 million to the deal, but Alere's board "promptly rejected that request."
Despite all this, Alere remains "completely confident that there is no basis for a termination of the merger agreement" and that the deal will be carried out, the company said.
Alere is taking Abbott's remarks from its recently revealed deal for St. Jude ($STJ) as a vote of confidence. Abbott this week struck a $25 billion deal for the med tech giant to create a cardiovascular device powerhouse. During its announcement, the company said it might issue $3 billion in stock to finance its deals with St. Jude and Alere.
Last week, White shrugged off questions about Alere during the company's Q1 earnings call. "I'm going to be careful how I answer any questions about Alere," White said on the call, "because as you know they've had delays filing their 10-K. We don't know when they will file their proxy. We don't know when they are going to have a shareholder vote. So right now I'd say it's not appropriate for me to comment on Alere."
Some analysts see White's reticence as a bad sign. Still, the CEO's comments were probably "intended to be as neutral as possible" given Alere's current spate of woes, Jeffries analyst Raj Denhoy said. Abbott will "keep its cards very close to its chest," Denhoy said, but that doesn't mean it's ruling out a deal with Alere altogether.
"We continue to think that Abbott does the deal but given all the recent news, as benign as they seem to us, it makes sense for the company to keep all of its options open," Denhoy said.