Abbott Laboratories (ABT, Financial) announced July 17 it is offering to buy all of Alere Inc.'s (ALR, Financial) preferred stock.Â
Abbott is offering to pay $402 per share in cash, plus accrued but unpaid dividends.
The offer, which is in relation to Abbott's acquisition of Alere, will expire on Aug. 11.Â
Abbott is acquiring Alere for $5.3 billion. The company will pay Alere’s shareholders $51 per ordinary share.
The deal is expected to close during the third quarter of fiscal 2017.
With this merger, Abbott Labs will accomplish two goals.
First, it will expand its product portflio to include a number of diagnostic tests used to detect cardiometabolic and infectious diseases. It will also enhance its commitment to helping people around the globe provide health care professionals and operators with reliable and rapid diagnostic tests. This will lower costs for the national health care system and enhance the profitability of its business.
Abbott's shares are currently trading around $48.76 per unit. The company has a price-sales (P/S) ratio of 3.79, a price-book (P/B) ratio of 2.70 and a price-earnings (P/E) ratio of 50.74.
For Abbott, analysts forecast an average EPS of $2.47 for full fiscal 2017. Multiplying the forecast by the forward P/E ratio of 17.67 yields a value of $43.64 per share. When the forward P/E ratio is multiplied by the 2018 average EPS forecast of $2.76, it yields a value of $48.76 per share.
The average target price per share is $51.38, which represents a 5.4% increase in the current market value per share. The recommendation rating is 1.9 out of a total of 10.
Abbott distributes an annual dividend of $1.06 through quarterly payments of 26.5 cents, for a dividend yield of 2.17%.
Disclosure: I have no positions in any stock mentioned in this article.
