Abbott Labs (NYSE: ABT) agreed to acquire Alere Inc. (NYSE: ALR) for $5.8 billion, significantly advancing its global diagnostics presence and leadership.

The combined enterprise total diagnostics sales is expected to exceed $7 billion, offering the broadest point of care menu of infectious disease, molecular, cardiometabolic and toxicology testing. Abbott’s platforms will be expanded to include benchtop and rapid strip tests. More than half of Alere’s $2.5 billion in sales are in the U.S. Alere also has a growing presence in key international markets, where Abbott’s capabilities and infrastructure will drive accelerated growth of Alere’s portfolio.

Abbott will be able to provide new, flexible, cost-effective, high-quality products to help health systems meet growing demand in both in-patient and out-patient settings. Alere’s complementary portfolio of products will provide Abbott access to new channels and geographies, including entry into fast-growing outlets, such as doctors’ offices, clinics, pharmacies and at-home testing.

“The combination of Alere and Abbott will create the world’s premier point of care testing business and significantly strengthen and grow Abbott’s diagnostics presence,” said Miles D. White, chairman and CEO, Abbott. “We want to offer our customers the best and broadest diagnostics solutions. Alere helps us do that.”

“Today’s announcement marks an exciting and transformative milestone for Alere and one that provides an immediate benefit for our stockholders,” said Namal Nawana, president and CEO, Alere. “Our leading platforms and global presence in point-of-care diagnostics, combined with Abbott’s broad portfolio of market-leading products, will accelerate our shared goal of improving patient care. I’d like to thank our global workforce of nearly 10,000 employees whose hard work and dedication has enabled Alere to contribute to improved patient outcomes throughout the world.”

The transaction will be immediately accretive to Abbott’s ongoing earnings per share upon close and significantly accretive thereafter, with approximately 12-13 cents of accretion in 2017 and more than 20 cents in 2018.* The combination is anticipated to result in annual pre-tax synergies approaching $500 million by 2019 and increasing thereafter, including both sales and operational benefits.

Under the terms of the agreement, Alere shareholders will receive $56 per common share in cash at the completion of the transaction, and Alere will become a subsidiary of Abbott. Alere’s net debt, currently $2.6 billion, will be assumed or refinanced by Abbott.

The transaction, which has been approved by the boards of directors of Alere and Abbott, is subject to the approval of Alere shareholders and the satisfaction of customary closing conditions, including applicable regulatory approvals.

Evercore is acting as financial advisor and Kirkland & Ellis LLP is serving as legal counsel to Abbott. JP Morgan is acting as financial advisor and Cravath, Swaine & Moore is serving as legal counsel to Alere.

Headquartered in Waltham, Mass., Alere is the global leader in point of care diagnostics with annual sales of $2.5 billion. Alere delivered more than 1.4 billion tests at the point of care in 2015. Its fast, easy-to-use and cost-effective tests are focused on the areas of infectious disease, molecular, cardiometabolic and toxicology. In addition to tests for infections such as HIV, tuberculosis, malaria and dengue that can benefit people in remote care settings, Alere develops simple, rapid tests, including Alere i, the first molecular CLIA-waived test for flu and strep, that delivers results in under 15 minutes.

Abbott is a global leader in in vitro diagnostics offering a broad portfolio spanning immunoassay, clinical chemistry, hematology, blood screening, molecular and point of care. Abbott’s 2015 worldwide diagnostics sales were $4.6 billion in 2015, including $473 million from its point of care business. Abbott’s leading handheld device, i-STAT, measures 26 analytes with two to three drops of blood and is used in more than one-third of all U.S. hospitals and emergency rooms.

Abbott is a global healthcare company devoted to improving life through the development of products and technologies that span the breadth of healthcare. With a portfolio of leading, science-based offerings in diagnostics, medical devices, nutritionals and branded generic pharmaceuticals, Abbott serves people in more than 150 countries and employs approximately 74,000 people. The company was founded in 1888 and is headquartered in Abbott Park, Illinois.

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