Abbott Laboratories (NYSE:ABT) has sued Alere Inc (NYSE:ALR), a diagnostics company it agreed to acquire earlier this year, for breach of contract. In the lawsuit, Abbott gives reason for its action as promoted by refusal by Alere to turn over certain documents.
Abbott says it wants to see the documents that Alere has refused to hand over before it can close their merger transaction. Alere is selling to ABT for $7.9 billion including assumption of certain obligations. Abbott is funding the deal in cash and debt.
Though Abbott has repeatedly said it is committed to closing the transaction with Alere, the two companies have recently appeared to be pulling in opposite direction. Alere in particular has claimed that the demands ABT is making are a part of a plot to kill the deal.
Probe of Alere’s business practices
The document and information that Abbott wants from Alere relate to civil and criminal investigations Alere is facing in connection with corruption and other violations of healthcare laws. The issue of Alere’s business practice being probed by U.S. regulators came to light after Abbott had agreed to acquire the company. Abbott feels that because it will assume the responsibility of the investigations after it acquires Alere, it needs to understand what’s going on. But it is frustrated that Alere has not been responding to its request for information.
“Abbott has reluctantly sought court intervention only after months of repeatedly and unsuccessfully attempting to get Alere to honor the agreement […],” said Abbott’s spokesman Scott Stoffel.
Alere had earlier sued Abbott, claiming that Abbott was out to scuttle the merger agreement by dragging its feet in seeking regulatory clearance for the transaction. The Abbott -Alere deal must be completed on April 30, 2017 or it would automatically collapse.
Buying St. Jude for $25 billion
Besides Alere, Abbott is also in the process of acquiring medical devices maker St. Jude Medical, Inc. (NYSE:STJ) for $25 billion.
Abbott stock declined less than 1% to $38.38 in the last session. But the stock is down more than 14% YTD.