Abbott Laboratories (ABT) Acquires Alere (ALR) - Stock Soars 45% At Market Opening

Alere Product Line Offers Synergies and Boosts Global Diagnostics Presence

2015 Revenues of Alere Are Estimated in $2.5B Range So Deal is About 2.3X Sales

Alere has a broad-based product line in rapid point-of-care diagnostics with tests for infectious disease such as influenza and HIV, cardiometabolic factors such as glucose and HbA1C and a broad portfolio in toxicology tests with a rapid analyzer for drug and alcohol testing.

Recently Alere cut Q4 2015 revenue guidance to $630M from around $650M because of currency headwinds and a mild flu season. Alere sales Q/Q shows a decline of 7.3%. Cash per share is 5.56.

The acquisition is expected to be accretive to 2016 earnings and will boost EPS by 12-13 cents with tax savings of $500M by 2019. Following the deal Abbot Labs’ sales in the clinical diagnostics sector would exceed $7B.

Alere was added to the Rayno Diagnostics and Tools Portfolio on 2/2/09 at a price of $25. Several companies in the Rayno Diagnostics Portfolio have been acquired over the years. Stocks gains have slowed in the sector recently due to slow growth and broad market issues but sequencing companies like Illumina (ILMN) and Pacific Biosciences (PACB) have shown strong results. Top winners in our  clinical diagnostics portfolio over 12 months are : Hologic (HOLX) up 14.5%, Neogen (NEOG) up 14% and ThermoFisher (TMO) up 4%.

Our Clinical Diagnostics and Tools Portfolio is currently under review pending 2015 financial results.