The unraveling of a $5.8 billion deal to buy Waltham diagnostic company Alere Inc. is laid out in stunning detail in a lawsuit charging would-be acquirer Abbott Laboratories with “suffering from a serious case of buyer’s remorse” as it schemed to torpedo the buyout.
Alere’s complaint, filed last week, was unsealed Wednesday in Delaware Chancery Court. It described Abbott’s chief executive, Miles White, as threatening in April — three months after his company agreed to purchase Alere — to use its lawyers to create a “living hell” for Alere if it didn’t agree to accept $30 million to $50 million to walk away from the transaction.
The partly-redacted lawsuit is an unabashed attempt to force Abbott, a health care giant based outside Chicago, to complete a transaction it had soured on. The document offers a rare behind-the-scenes glimpse at the bare-knuckled tactics allegedly employed by Abbott executives in closed-door talks with Alere counterparts, including chief executive Namal Nawana.
Abbott officials denied Alere’s charges, insisting they were meeting their obligations under the merger agreement.
“Alere’s complaint is nonsense and without merit,” said Abbott spokeswoman Darcy Ross. “Their description of events is fiction and nothing but a publicity stunt.”
Jackie Lustig, a spokeswoman for Alere, said executives wouldn’t discuss the complaint. But she said the Waltham company looked forward to a hearing in the Delaware court.
“The facts speak for themselves — as demonstrated by our complaint, Abbott has failed to fulfill its obligations under the terms of the merger agreement to promptly secure antitrust approvals and other regulatory requirements,” she said. “Alere will take all actions necessary to protect the interests of Alere shareholders, enforce Alere’s rights under the merger agreement and compel Abbott to complete the transaction in accordance with its terms.”
Shares of Alere fell 18 cents to $39.13, losing 0.5 percent Wednesday on the New York Stock Exchange. The shares have been trading substantially below Abbott’s $56-a-share offer. Abbott’s shares dropped 81 cents to $42.02, a decline of 1.9 percent Wednesday.
Alere, spun out of Johnson & Johnson in 2001, has grown into a global leader in “point-of-care” tests used in doctors’ offices, clinics, pharmacies, and patients’ homes. It has nearly 10,000 employees worldwide, including more than 100 in Waltham. After it agreed to the proposed Abbott buyout, Alere disclosed that it was the subject of a pair of federal investigations into its foreign sales practices and its billing practices in the United States.
In its lawsuit, Alere attributed Abbott’s change of heart not to those inquiries but to the Chicago company’s determination to pursue a much larger acquisition of medical device giant St. Jude Medical Inc. of St. Paul, for which Abbott offered $25 billion on April 28. Buying both companies would force Abbott to triple its debt load, Alere’s suit said.
On April 19, the complaint said, Abbott “made the veiled threat that it would find a way to terminate the [Alere] merger agreement or otherwise thwart the merger’s closing by failing to secure necessary regulatory approvals” unless Alere agreed to the walk-away payout.
Since then, “Abbott has inundated Alere with more than 50 letters containing no fewer than 175 litigation-style requests for the production of broad categories of documents,” according to the lawsuit. It said Abbott also demanded “no fewer than 40 ‘interviews’ with various individuals worldwide” and “written responses to no fewer than 225 contention-type interrogatories.”
The complaint said Alere has complied with Abbott’s requests despite their “unreasonableness.”
“To date,” it said, “Alere has produced nearly 1 million pages of documents in response to Abbott’s letters and has also made 33 of its employees and representatives available to Abbott’s outside litigation counsel for what have turned out to be adversarial interviews across the world.”