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Axis-Shield Recommends Rejection of Alere’s Takeover Offer

Axis-Shield Plc (ASD), the maker of the Afinion diagnostic tests, recommended shareholders reject a 460- pence-a-share hostile takeover bid from Alere Inc. (ALR), saying it undervalues the company.

The offer doesn’t reflect the growth potential of a new test for lipids and cholesterol, Dundee, Scotland-based Axis- Shield said today in a statement responding to the 230 million- pound ($377 million) cash bid. Alere, based in Waltham, Massachusetts, made its offer public on July 6, saying Axis- Shield would fit well with its business of selling tests for use in doctors’ offices.

“What we want is for everyone to appreciate the real value of Axis-Shield and its prospects,” Chairman John Brown said in a phone interview today. “That’s what this document seeks to set out.”

Axis-Shield’s stock is trading above 460 pence in anticipation of a higher bid from Alere or another potential acquirer. The shares fell 0.1 percent to 477.5 pence at the 4:30 p.m. close of London trading, giving them a gain of 77 percent this year. Before the bid, Axis-Shield shares hadn’t closed above 460 pence since March 2001.

“I would be quite happy to sell my shares to them, but I would only be willing to sell at a price far north of 460 pence,” Mark Niznik, manager of the Artemis U.K. Smaller Companies Fund, said in a phone interview before Axis-Shield issued its statement. Axis-Shield makes up 3.5 percent of his fund.

Tender Offer

Alere this month began a tender offer for Axis-Shield and has bought 9 percent of the company’s shares, according to data compiled by Bloomberg. The bid runs through Sept. 1. Axis-Shield previously said the offer undervalued the company. Today’s statement lays out the reasons for the rejection, as required by U.K. takeover law.

Axis-Shield supplies instruments and tests used in doctors’ offices, and makes diagnostic kits for heart disease, diabetes and other illnesses.

Axis-Shield’s value is “significantly higher” than Alere’s bid because emerging-markets expansion will drive sales growth, Chief Executive Officer Ian Gilham said in an Aug. 21 interview. Chairman Brown declined to comment today on whether other companies had approached Axis-Shield.

The Scottish company’s Afinion machine, which doctors use to detect diabetes, bacterial and viral infections, competes with Alere’s Cholestech LDX System.

‘Strategic Value’

“This is a business of high strategic value to Alere not only because of the point-of-care franchise of Afinion, which could potentially cannibalize its sales, but because Alere used to be in diabetes but they sold that business,” said Sebastien Jantet, an analyst with Investec Securities in London. “If they acquired Axis-Shield by then it would give them a step change.”

Afinion sales rose 43 percent to 15.2 million pounds in the first half, the company said yesterday. Axis-Shield is “on track” to begin selling a test for cardiovascular disease and cholesterol for use with the Afinion machine in Europe this year and to file for U.S. approval by year-end or next year.

Ginny Pulbrook, a spokeswoman for Alere at Citigate Dewe Rogerson, declined to comment on Axis-Shield’s statement today.

To contact the reporter on this story: Sarah Halls in London at shalls@bloomberg.net

To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net

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