Abbott to buy rapid diagnostic testing provider Alere for $5.8 bn

Abbott Laboratories yesterday struck a deal to buy rapid diagnostic testing provider Alere Inc for $5.8 billion.

Under the financial terms of the deal, Abbott will pay $56 per share, and will assume $2.6 billion of Alere's net debt.

The offer represents a premium of more than 50 per cent over Alere's closing stock price on Friday.

The merger is expected to generate annual pre-tax synergies of nearly $500 million by 2019 through sales and operational benefits.

With annual sales of $2.5 billion, Waltham, Massachusetts-based Alere makes tests for infections such as HIV, tuberculosis, malaria and dengue.

Its tests, which are fast, easy-to-use and cost-effective, are focused on the areas of infectious disease, molecular, cardiometabolic and toxicology. The company has carried out more than 1.4 billion tests at the point of care in 2015.

Alere, which had a market value of $3.2 billion on Friday, also develops simple, rapid tests, including Alere i, the first molecular CLIA-waived test for flu and strep, that provides results in under 15 minutes.

More than half of Alere's $2.5 billion in sales are generated in the US, while it represented about 10 per cent of Abbott's total diagnostic sales of $4.6 billion last year.

Post closing, Abbott, which spun out AbbVie Inc in 2013, will become the leading diagnostics provider of point of care testing with total diagnostics sales exceeding $7 billion.

Alere was a low cost takeover target as its shares has plunged by more than 20 per cent in the past six months due to weaker sales in Africa and Asia, a milder flu season in the US.

Abbott said that point of care testing is a $5.5 billion segment and one of the fastest growing in vitro diagnostics segments, in part because many health care systems are increasing their reliance on these technologies to inform patient care decisions in a matter of minutes.

Abbott is a global leader in vitro diagnostics offering a broad portfolio spanning immunoassay, clinical chemistry, hematology, blood screening, molecular and point of care.

Its 2015 worldwide diagnostics sales were $4.6 billion in 2015, including $473 million from its point of care business. Abbott's handheld device, i-STAT, measures 26 analytes with two to three drops of blood and is used in more than one-third of all US hospitals and emergency rooms.

Miles White, chairman and CEO of Abbott said, "The combination of Alere and Abbott will create the world's premier point of care testing business and significantly strengthen and grow Abbott's diagnostics presence."

"Today's announcement marks an exciting and transformative milestone for Alere and one that provides an immediate benefit for our stockholders," said Namal Nawana, president and CEO, Alere. "Our leading platforms and global presence in point-of-care diagnostics, combined with Abbott's broad portfolio of market-leading products, will accelerate our shared goal of improving patient care.''

The transaction, which has been approved by the boards of directors of Alere and Abbott, is subject to the approval of Alere shareholders and the satisfaction of customary closing conditions, including applicable regulatory approvals.