Del. (Legal Newsline) – Global health care company Abbott Laboratories is asking a Delaware court to
terminate its proposed merger with Alere because, it says, the company has been
so poorly run that it no longer resembles its former self.
On Dec. 7,
Abbott filed its complaint in Delaware Chancery Court against Alere, as well as
motions to consolidate two other lawsuits over the proposed merger and a motion
to expedite proceedings. The documents were made available to the public on Dec. 12.
One of Abbott's chief concerns is that an Alere subsidiary billed the federal government
for services to hundreds of dead people over a five-year period.
“Alere is no
longer the company Abbott agreed to buy when the parties signed their merger
agreement in January,” the motion to expedite says.
disclosed in November that its subsidiary Arriva Medical submitted Medicare claims
for 211 deceased patients, leading to the revocation of its Medicare
post-agreement public setbacks have been extraordinary,” Abbott’s attorneys
wrote in the complaint. “Less than a month after the parties signed the merger
agreement, Alere announced that it would be unable to file its 10-K on time due
to an ongoing investigation of revenue recognition issues.
Alere has announced an endless sequence of equally serious problems – making it
a materially different company than the one Abbott agreed to buy…”
problems listed by Abbott include:
by the company to conceal pertinent information from Abbott;
recall of INRatio monitoring systems in July and subsequent lawsuits that blame
INRatio for injuries and 16 deaths;
government subpoenas, two of which are criminal; and
of internal control failures requiring a restatement of three years of previous
merger was signed on Jan. 30, Alere’s stock stood at $56 per share - the price to which Abbott agreed to pay shareholders. As of Dec.
13, its stock price is $37.85 per share.
The stock drop has also led to at least one lawsuit brought by shareholders who blame executives at the company.
Abbott nor any reasonable acquirer would have agreed to the deal had it known
Alere would be subject to such material long-term problems as the result of
systemic internal control failures,” the Abbott complaint says.
a statement that called Abbott’s lawsuit entirely without merit.
well knows, none of the issues it has raised provides it with any grounds to
avoid closing the merger,” the statement says.
fully complied with its contractual obligations under the merger agreement and
is highly confident that the merger will be completed in accordance with the
terms set forth in the merger agreement.
take all actions necessary to protect its shareholders and to compel Abbott to
complete the transaction in accordance with its terms.”
the case will be a clause in the agreement that states Abbott is not required
to close the merger if there has been any occurrence that has had or would
reasonably be expected to have a “material adverse effect.”
it bargained for this closing condition in the event Alere committed certain
actions that damaged the value of the company.
precisely what has happened,” the complaint says.
Newsline: Reach editor John O’Brien at email@example.com.