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Alere buys employee-testing company

by Ben Fidler | Published February 28, 2012 at 4:56 PM

Diagnostic-testing company Alere Inc. has made its second M&A strike since a successful hostile bid for Scotland-based Axis-Shield plc in October, agreeing on Tuesday, Feb. 28, to acquire privately held employment-screening specialist eScreen Inc. in a deal worth as much as $340 million.

Waltham, Mass.-based Alere will pay $270 million in cash, subject to working capital adjustments, and up to $70 million in follow-on contingent consideration, for eScreen. The total price is approximately 3 times eScreen's roughly $120 million in revenue in 2011.

The deal is expected to close within the next 45 days.

EScreen of Overland Park, Kan., is a third-party administrator of electronic drug tests and automated-hiring programs. The company offers an instrument-read, rapid, urine-based drug test system approved by the U.S. Food and Drug Administration that gives a paperless drug-screening alternative to conventional laboratory-based tests. EScreen also has a portfolio of employee-related health testing products. Private equity firm Carlyle Group made an investment in eScreen in 2008 through U.S. venture and growth capital fund Carlyle Venture Partners III but never disclosed the amount.

Alere CEO Ron Zwanziger said in a statement that the deal would boost the company's presence in the global toxicology market while enhancing the number of diagnostic services it can offer to employers in the U.S. and around the world. He noted, for example, that employers are "increasingly shouldering the burden for the care of their workforce" and are increasingly "dictating their health testing needs." For Alere, a diagnostics and health management company focused on cardiology, women's health, infectious disease, oncology and toxicology, the acquisition continues what has been an active few years on the M&A front. Most recently, Alere paid $65 million for Arriva Medical, which operates a national mail-order distribution business of diabetes testing supplies, in November. That deal came just a month after Alere won a hostile takeover for fellow diagnostic products maker Axis-Shield in a deal worth £235 million ($364 million).

Alere's stock traded up slightly from a $25.69 close on Monday to a $25.87 per share price midday Tuesday. The company lost $131.5 million on $2.39 billion in revenue in 2011.

Neither Alere nor eScreen responded to calls Tuesday.

Covington & Burling LLP and Miller Nash LLP provided eScreen with legal advice.

Jonathan Knee, John Honts, Jason Sobol, Nishant Saxena, Amir Tooreseenin and Radha Desai of Evercore Partners Inc. are eScreen's financial advisers.

Mark Haddad and Mary Beth Noonan Heath of Foley Hoag LLP served as Alere's legal counsel.

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