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Why Abbott And Alere Should Quit The Games And Complete The Tie-Up

In February this year, Abbott Laboratories (NYSE:ABT) announced the acquisition of Alere (NYSE:ALR), one of the world’s leading POC testing companies for $5.8 billion. This acquisition gave Abbott—a leading company in the healthcare sector with a market cap of $66 billion—an opportunity to dominate the POC (Point of Care) pregnancy and fertility testing market. However, over the last few months, the chances of the deal going through appear to have diminished with both parties increasingly becoming noncommittal.

Alere has been forced to allow Abbott to audit its books as the deal inches towards stalemate. And even after the Abbott confirmed Alere's financial's there are still questions being asked. Abbott's representatives in the deal believe that Alere is still withholding some key information. "Although Alere has provided some information to Abbott, Alere has denied Abbott the access to which it is entitled under the Alere merger agreement," Abbott said in a filing with the SEC. "In light of the above, Abbott cannot predict at this time whether the Alere acquisition will occur on a timely basis, if at all."

In response, Alere said that "Abbott continues to make seemingly endless, unreasonable requests for even more information to which it is not entitled under the merger agreement." Therefore, it appears that the negotiations could continue in the foreseeable future before the deal is finally sealed.

Why the two companies should quit the games and complete the tie-up

Abbott operates in a variety of markets including a segment that covers female health diagnostics products. Alere’s tie-up will boost this unit thereby increasing the company’s market share in the overall POC testing market.

Self-test POC pregnancy and ovulation are amongst the leading female health products in the point of care market. With Alere having been among the top players in this segment, there are bound to be significant—production and selling—synergies that will yield more returns for Abbott in the coming quarters.

Disclosure: The material appearing on this article is based on data and information from sources I believe to be accurate and reliable. However, the material is not guaranteed as to accuracy nor does it purport to be complete. Opinions and projections, both my own and those of others, reflect views as of dates indicated and are subject to change without notice. The contributions and opinions of others do not necessarily reflect the views of Nicholas Kitonyi. Nothing appearing on this article...


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