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Alere Confirms Compliance With Abbott Merger Terms In Wake of Audit Report

NEW YORK (GenomeWeb) – Alere confirmed today that it is in full compliance with its merger agreement with Abbott Laboratories following a report Wednesday that Abbott was exercising its contractual right to audit the books and records of Alere, and that Abbott had received a partial response from Alere.

"We are confident that the transaction will be completed in accordance with its terms," said Jackie Lustig, senior director of corporate communications at Alere. "That's all we can say at this time."

Abbott officials did not return calls to GenomeWeb seeking comment.

Abbott agreed earlier this year to pay $5.8 billion to acquire Alere. Uncertainty around the acquisition emerged because Alere delayed filing its 10-K report with US securities regulators; Abbott requested termination of the acquisition; Alere refused Abbott’s termination request; and Alere received a grand jury subpoena from the US Department of Justice over sales practices and dealings in Africa, Asia, and Latin America.

Bloomberg News reported Wednesday that Abbott said it was abiding by the terms of the contract with Alere, and it "has exercised its contractual rights to audit Alere's books and records." In the report, an Abbott spokesperson said it had received a partial response from Alere.  

When Abbott announced the deal, it was seen as a sign of the potential strength of the point-of-care diagnostics market, including the burgeoning molecular portion of the market. If the purchase goes through, Abbott will become a leading provider of point-of-care medical tests.

The global point-of-care molecular diagnostics market was valued at $1.2 billion in 2015, according to a report by Grand View Research, a California-based market research and consulting firm, and the market is anticipated to reach $3.9 billion by 2024.

Alere said in February that it was reviewing how it recognized revenue in Africa and China, and subsequently disclosed that it had received a subpoena from the US Department of Justice related to the Foreign Corrupt Practices Act. Wall Street analysts have also suggested Alere may be unwilling to give Abbott full access to audit its books until its restatement of revenue is complete.

Over the past couple of months, some have questioned whether the deal will be consummated. On April 20, during Abbott's first quarter conference call, Abbott CEO Miles White declined to affirm the company's commitment to completing the proposed acquisition, causing Alere’s shares to fall around 13 percent that day.

Alere's shares sunk further on April 29, after the company disclosed that its board rejected Abbott's attempt to end the pending acquisition. Abbott had offered to pay Alere between $30 million and $50 million to cancel the transaction.

In Thursday afternoon trade on the New York Stock Exchange, shares of Alere were up a fraction of a percent at $42.97, while shares of Abbott also were up a fraction of 1 percent at $39.56.