Mediation fails in Abbott’s dispute with Alere over $6B merger

Mediation efforts looking to resolve antitrust disagreements that have stalled the $5.8 billion merger of Alere (NYSE:ALR) and Abbott (NYSE:ABT) have failed, according to an SEC filing from Alere posted Monday.

The companies told a Delaware state court earlier in the month that they would seek to mediate their dispute over the pending merger.

The dispute concerns Abbott’s role in winning the approval of U.S. anti-trust regulators for the merger, which was announced in February. Alere filed the lawsuit in August, looking to force Abbott to obtain all antitrust approvals required to complete the acquisition. In early September, Delaware Chancery Court Judge Sam Glasscock put the hearing on the fast track, but urged both sides to consider mediation before Sept. 9, when a trial date was to be set.

“On September 2, 2016, the Delaware Chancery Court granted the company’s motion to expedite, and stayed the proceedings and suggested that the parties consider mediation. The parties subsequently informed the court that they agreed to pursue mediation. Mediation concluded without resolution, and the matter is still pending,” Alere wrote in an SEC filing.

Alere called for a special meeting of shareholders, slated for October 21, looking to gain shareholder approval for the merger, though it is unknown whether a ruling will be issued on the case pending by that date.

Alere claims that Abbott’s $25 billion buyout of St. Jude Medical (NYSE:STJ), announced in April after the Alere deal surfaced, is the real reason for Abbott’s cold feet. Abbott alleges that a series of federal probes and Alere’s delay in filing its 2015 annual report are behind its desire to spike the transaction.

One of the probes, a U.S. Justice Dept. investigation into its sales practices, was revealed after Abbott agreed to buy Alere in February. A Securities & Exchange Commission investigation into its revenue recognition was already public at the time of the deal.

Under the current deal, Abbott has nearly 8 more months to receive antitrust approval and close the deal. The acquisition has seen its share of hiccups along the way, including a rejected $50 million offer from Abbott to spike the merger and a securities fraud lawsuit accusing Alere of artificially inflating its share price ahead of announcing the merger.

Earlier in August, Alere said it is confident the potential $6 billion merger will go through, despite concerns that it could fail.

Alere is also facing a consolidated lawsuit from Alere shareholders who purchased stock in the company between May 28, 2015 and July 27, 2016. The suit alleges that Alere violated federal securities laws by making “materially false and misleading statements and omissions concerning Alere’s business, finances and operations,” according to court documents.

The suit was filed on Sept. 23 in the U.S. District Court for the District of Massachusette accusing Alere, CEO Namal Nawan, CFO James Hinrichs and former CAO Carla Flakne of intentionally misrepresenting the state of the company in order to seek a profitable acquisition.

The suit alleges that Nawana and Hinrichs would receive a 1-time payment of $29 million with the sale, and were “highly motivated to, and did, misrepresent the apparent financial and operational condition of Alere through a series of materially false and misleading statements, which artificially inflated Alere’s stock price,” according to court documents.

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