Abbott Labs to Acquire Diagnostics-Testing Company Alere--Update
February 01 2016 - 10:14AM
Dow Jones News
By Tess Stynes
Abbott Laboratories agreed to acquire diagnostic-test company
Alere Inc. for $5.8 billion, a deal Abbott expects will make it a
leading provider of point-of-care testing.
Alere shares soared 45% to $53.84 in morning trading in New
York, reflecting the deal price of $56 a share, a 51% premium to
Friday's close. Abbott also said Alere's net debt, currently about
$2.6 billion, would be assumed or refinanced by Abbott.
Following the deal, Abbott said its total diagnostics sales
would exceed $7 billion. Abbott shares slid 2% to $37.10.
The deal comes days after Abbott reported its profit fell 15% in
the final quarter of the year, as the stronger dollar weighed on
its results in emerging markets. The company also issued annual
guidance sharply below Wall Street expectations.
On the company's conference call Thursday, Abbott Chief
Executive Miles White sounded pessimistic about making near-term
acquisitions, particularly in emerging markets.
Abbott said Monday that more than half of Alere's $2.5 billion
in annual sales are in the U.S.
Abbott said the deal would expand its platforms to include
benchtop and rapid strip tests. The company expects the transaction
will boost its per-share earnings immediately upon closing, raise
its per-share profit by 12 cents to 13 cents next year and provide
a boost of more than 20 cents a share in 2018.
The combined company is expected to see pretax savings of $500
million a year by 2019, with more sales and operational benefits
afterward
Last month, Alere said fourth-quarter revenue would miss
estimates as it faces foreign-exchange headwinds and a quiet North
American flu season. For 2015, analysts expect Alere to report
revenue of $2.49 billion, according to Thomson Reuters.
Abbott reported sales of $20.4 billion in 2015, up 0.8% from the
previous year.
Under the deal, Abbott will pay about $4.8 billion for Alere's
common stock, with the rest of the deal covering restricted stock
units, options and preferred shares.
Write to Tess Stynes at tess.stynes@wsj.com
(END) Dow Jones Newswires
February 01, 2016 09:59 ET (14:59 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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