Abbott Laboratories (ABT - Get Report) has finally gone public in an attempt to break free of its pending $7.9 billion cash-and-debt merger agreement with Alere (ALR) after months of sparring with the point-of-care testing company.
The Abbott Park, Ill.-based buyer on Wednesday filed a suit against Alere in the Delaware Court of Chancery seeking to terminate the Feb. 1 transaction. With a string of issues having come to light over the past several months, Abbott is claiming that the Waltham, Mass.-based target has suffered from material adverse events, which as defined in their contract warrants its termination.
A redacted version of the sealed complaint is expected to be made public within three business days, Abbott spokesman Scott Stoffel told The Deal.
"Alere is no longer the company Abbott agreed to buy 10 months ago," Stoffel said in a statement. "These numerous negative developments are unprecedented and are not isolated incidents brought on by chance. We have attempted to secure details and information to assess these issues for months, and Alere has blocked every attempt. This damage to Alere's business can only be the result of a systemic failure of internal controls, which combined with the lack of transparency, led us to filing this complaint."
In response to Abbott's complaint, Alere issued a statement early afternoon on Wednesday asserting that the "lawsuit is entirely without merit."
"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," the statement said.
Abbott hasn't until now outright asked the court to let it walk from the deal it reached more than nine months ago, but the Miles White-led company arguably began to plant the seeds for a potential case months ago. Adding to the conjecture it wanted out in November, Abbott filed a breach of contract suit against Alere seeking further documentation and information as promised within their merger agreement.
Strine wrote in the case that an MAE clause "is best read as a backstop protecting the acquirer from the occurrence of unknown events that substantially threaten the overall earnings potential of the target in a durationally significant manner," since most merger agreements—including the one between Abbott and Alere—are heavily negotiated and contain numerous conditions that both parties must meet in order to close the deal.