Alere Shares Rise After Abbott Deal on Bribery-Probe Records

  • Alere agrees to hand over details on federal investigations
  • Companies have traded suits, blame over $5.8 billion buyout

Alere Inc. rose the most in more than two months after agreeing to turn over files about bribery probes of its foreign operations and U.S. billing practices to Abbott Laboratories to settle a contentious dispute that has delayed its acquisition.

The settlement, reached Tuesday, is the latest development in the legal jockeying over Abbott’s $5.8 billion offer for Alere, which makes medical testing kits. Both companies traded lawsuits over the deal, with Alere accusing Abbott of cold feet and Abbott countering that Alere is hiding crucial details about several federal investigations. 

While Alere’s lawsuit is still pending, the company agreed to turn over the information Abbott sought. The settlement, which comes less than two weeks after the suit was filed, was made public during a hearing before Delaware Chancery Court Judge Sam Glasscock III.

The settlement is “incrementally positive,” said Jonathan Palmer, an analyst with Bloomberg Intelligence in New York.

“The news that Abbott and Alere settled one of their lawsuits is a small concession on Alere’s part,” Palmer said, noting that the spread between Abbott’s original offer and the current price suggests a high level of uncertainty. “The bigger questions remain around Abbott’s appetite to complete the deal and whether Alere can compel them to do so.”

Stock Move

Alere climbed 4.9 percent to $37.93 at 12:07 p.m. in New York trading, after a 5.3 percent gain that marked the biggest since Sept. 7. Abbott shares rose 0.6 percent to $40.03.

“Abbott will be receiving the information it requested in its complaint,” Scott Stoffel, a company spokesman, said Tuesday.

Alere said that while it believes the lawsuit was entirely without merit, it agreed to provide Abbott with much of the information it requested for the sake of closing the deal as quickly as possible.

“Alere is highly confident that the merger will be completed in accordance with the terms set forth in the merger agreement,” the company said in a statement.

Federal Probes

The deal ran into trouble after Waltham, Massachusetts-based Alere delayed regulatory filings about its 2015 financial performance. Alere has since made public three U.S. probes into its business practices.

Federal prosecutors issued subpoenas in March for information about Alere’s operations in Asia, Africa and Latin America. In July, two more investigations emerged into its billing practices for U.S. government insurance programs, including a Justice Department request for information dating back to 2010 on pain management payments for Medicare and Medicaid patients.

This month, Alere’s diabetes unit was cut from the government’s Medicare program because the business allegedly submitted claims for more than 200 dead patients over a five-year period.

Abbott officials accused Alere executives of refusing to grant “reasonable access” to its accounting records as required under the buyout agreement, leaving the Abbott Park, Illinois-based drugmaker unable to verify the legality of its merger partner’s actions.

“Alere has refused to provide Abbott three critical categories of information relating to these ongoing government investigations,” the company said in a court filing.

Alere executives accuse Abbott officials of getting cold feet about the takeover after agreeing to buy medical-device maker St. Jude Medical Inc. for $25 billion in April. In its lawsuit filed in August, Alere claimed Abbott sought to renege on its buyout agreement by dragging its feet in securing antitrust clearances.

Alere said in August that it provided Abbott significantly more information than is required by law, including almost 1 million pages of documentation and access to dozens of employees for interviews.

Abbott agreed to buy Alere to strengthen its diagnostic business, a move that would position the company as the leader in the market for rapid medical testing. Abbott Chief Executive Miles White has said that despite the tussle over the buyout, the deal is still strategically beneficial.

The case is Abbott Laboratories v. Alere Inc., CA 12872, Delaware Chancery Court (Wilmington).

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