By Natalie Grover and Akankshita Mukhopadhyay
(Reuters) – Abbott Laboratories said it was looking to close the recently revised deal to buy Alere Inc in the coming months, calling the diagnostics company “a bit of a fixer-upper”.
Abbott, which reported first-quarter sales and profit ahead of analysts’ estimates on Wednesday, first revealed an agreement to buy Alere in February 2016. But the deal ran into trouble as issues related to Alere’s accounting and sales practices came to light.
However, last week, Abbott agreed to the takeover at a price of around $5.30 billion down from $5.80 billion, ending the prolonged legal tussle.
Alere has had some challenges and closing the deal is going to be a bit unpredictable, because Alere still needs to file its annual report and Abbott is required to divest some businesses for regulatory approvals, Abbott CFO Brian Yoor said on a post-earnings conference call.
The Alere deal is now expected to close in the third quarter, and will help Abbott expand in point-of-care diagnostic testing, a market that is rapidly growing as physicians increasingly adopt tests that speed up treatment.
Abbott has been considerably active on the M&A front. Last year, it agreed sell its medical optics division to Johnson & Johnson for $4.3 billion, and closed its $25 billion acquisition of St. Jude Medical this January.
The company’s first-quarter net sales rose 3.2 percent on an operational basis to $6.34 billion, above the average analyst estimate of $6.15 billion, according to Thomson Reuters I/B/E/S.
While sales in its diagnostics, medical devices and branded generic pharmaceuticals divisions grew in the quarter ended March 31, Abbott’s nutrition business continued to suffer.
Global nutrition sales dipped 1 percent on an operational basis, hurt mainly by continued challenges in the Chinese infant formula market.
New food safety regulations in China require manufacturers to re-register baby formulas with the government.
“As the government transitions through these new regulations, I think that’s going to be a little bumpy and it has been… but I think we feel pretty good about China for the long term,” Abbott CEO Miles White said.
Excluding items, Abbott earned 48 cents per share, beating the average analyst estimate by 5 cents.
Shares of the diversified healthcare company, which also maintained its 2017 forecast, were little changed in afternoon trading. As of yesterday’s close, Abbott’s stock had risen nearly 15 percent since it announced the Alere deal in February last year.
(Reporting by Natalie Grover and Akankshita Mukhopadhyay in Bengaluru; Editing by Martina D’Couto)