Abbott sues to scrap its $5.8 billion planned takeover of Waltham’s Alere

Abbott Laboratories, maker of drugs, infant formula (above), and medical devices, said it has filed a complaint to terminate its agreement to buy Alere Inc., citing a substantial loss in the value of the company. Mark Duncan/Associated Press/Associated Press

Health care giant Abbott Laboratories said Wednesday that it has filed a lawsuit in an effort to terminate its $5.8 billion agreement to buy Waltham-based Alere Inc., saying the medical test developer has lost significant value since the deal was made public in February.

In a statement, Abbott said Alere has “suffered a series of damaging business developments” that caused it to sour on the acquisition, including Medicare’s elimination of billing privileges for a major Alere division, Arriva Medical. In addition, Abbott said, Alere has recalled an important set of products, and it faces two criminal probes that weren’t disclosed when the agreement was signed on Jan. 30.

“Alere’s not the company it was when we signed the merger agreement,” Abbott spokesman Scott Stoffel said in an interview. “These material adverse events are a product of a lack of external controls at Alere. They constitute a strong base for terminating this transaction.”

Shareholders of Alere — a global leader in tests performed at doctors’ offices, pharmacies, and patients’ homes — voted overwhelmingly on Oct. 21 to approve the acquisition by Abbott. In a separate vote, they OK’d one-time payments to Alere’s top five executives totaling more than $39 million — including nearly $20.5 million for chief executive Namal Nawana — if the buyout is completed.

In a statement Wednesday, Alere called Abbott’s lawsuit “entirely without merit” and vowed to take whatever actions are needed to compel Abbott to complete it.

“As Abbott well knows, none of the issues it has raised provides it with any grounds to avoid closing the merger,” Alere said. “Alere has 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.”

Shares of Alere tumbled 8 percent to $36.67 on the New York Stock Exchange, losing $3.19. Abbott’s shares closed up 0.1 percent at $38.48, a gain of 6 cents.

Stoffel said Abbott filed its complaint in the Delaware Court of Chancery, which would have to approve the termination of the takeover. The suit, which will remain under seal for several days, marks the first time Abbott has acknowledged it wants to scrap the deal. Until now, the Illinois-based company’s executives have said publicly that they remained committed to buying Alere.

Alere, however, filed a lawsuit against Abbott in August charging the would-be acquirer with scheming to torpedo the merger and threatening to create a “living hell” for Alere executives if they didn’t accept a walkaway fee of $30 million to $50 million. Abbott dismissed the Alere claims in that suit as “fiction,” while demanding more information from Alere.

After it disclosed its plan to buy Alere last winter, Abbott announced an even bigger takeover, agreeing to pay $25 billion to buy St. Jude Medical Inc. of St. Paul.