The merger deal between Abbott Laboratories (ABT) and Alere (ALR) has become an extended battle, and Wall Street analysts have been closely watching the ongoing developments in this deal.
On December 7, 2016, Scott Stoffel, divisional vice president of external communications at Abbott Laboratories, noted, “Alere is no longer the company Abbott agreed to buy 10 months ago.”
Three months after announcing a $5.8 billion deal in which Abbott Laboratories (ABT) would buy Alere (ALR), Alere rejected Abbott’s $50 million offer to end the deal. On December 7, Abbott sued Alere to terminate the deal.
On September 16, 2016, Johnson & Johnson announced the acquisition of Abbott Medical Optics, a subsidiary of Abbott Laboratories, and its stock fell ~0.3%.
A top IHI performer on June 2, 2016, was Waters (WAT), which rose 0.9%. The company was in the news with the introduction of its new data pipeline software.
Abbott will issue about $3 billion in common stock in a secondary offering. Abbott has the financing in place to do both the Alere deal and the St. Jude deal.
Abbott Labs is buying St. Jude Medical for about $30 billion in cash, stock, and assumed debt to become a dominant player in the cardiovascular health space.
The MAE clause is one of the first things that arbitrageurs check. For a merger spread comparable to the Abbott-Alere deal, check out the Cigna-Anthem deal.
The standard MAE (material adverse effect) clause specifies that anything bad that happens to Alere that delays or ruins the deal’s economics is an MAE.
Alere provides diagnostic solutions in the healthcare industry, primarily in infectious disease. Abbott Labs is buying Alere to boost its diagnostics line.
Alere and Abbott Labs anticipate they will generate approximately $500 million in annualized selling, general, and administrative cost synergies by 2019.
With most mergers, the rate of return is driven by the time it takes to finalize the transaction. In the Alere-Abbott deal, several conditions must be met.
Alere was trading at about $37 per share before the deal with Abbott was announced. If the deal breaks, will Alere’s share price return to its former level?
The price-to-book value ratios of Cepheid, Thermo Fischer, Becton, Dickinson and Company, Alere, and Bio-Rad Labs are 6.19x, 2.48x, 4.05x, 2.58x, and 1.72x.
Investor flows in high yield bond funds plummeted into negative territory last week. Year-to-date, high yield bond funds have witnessed inflows to the tune of $5.5 billion.
Packaging material manufacturer Sealed Air (SEE) issued dollar-denominated junk bonds worth $400 million. The bonds were rated B1/BB and carried a coupon of 5.5%.
Since mid-February 2015, refinancing has been the purpose of choice for high yield debt issuers. Refinancing deals not only outnumbered others, they also emerged as the biggest of the week.
Point72 Asset Management’s portfolio decreased slightly to $13.2 billion in the third quarter—compared to $15.6 billion in the second quarter. The third quarter ended in September.
