Please ensure Javascript is enabled for purposes of website accessibility

Here's Why Alere's Stock Is Soaring Today

By George Budwell - Feb 1, 2016 at 12:15PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Abbott Labs adds to its medical diagnostic portfolio by buying Alere for $5.8 billion.

What: Shares of the medical diagnostic company Alere (NYSE: ALR) jumped 45% today on a $5.8 billion buyout deal with Abbott Laboratories (ABT -0.41%). Abbott is reportedly paying $56 per share for Alere in an all-cash deal, representing a 50% premium compared to where Alere's shares were trading following Friday's close. Per the terms of the deal, Abbott will also assume $2.6 billion of Alere's outstanding debt.

So what: This buyout will significantly bolster Abbott's point-of-care testing portfolio for infectious diseases, and immediately add to the company's earnings upon closing. Perhaps the bigger issue, though, is that Abbott's willingness to execute a deal at a 50% premium shows that the appetite for M&A among healthcare companies hasn't wavered, despite the sector's massive sell-off last month. 

Now what: According to S&P Capital IQ, Alere's product portfolio is expected to generate around $2.5 billion in sales in 2016. So, Abbott seems to be getting a fairly reasonable price for Alere's diagnostic assets, especially since the deal will grow the company's bottom line right away. That's why investors may want to take a deeper look at Abbott today. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Abbott Laboratories Stock Quote
Abbott Laboratories
$108.65 (-0.41%) $0.45

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/30/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.