Abbott Labs, Alza Call Off Merger

Abbott Laboratories Inc. and Alza Corp. called off their $7.3-billion merger because they were unable to resolve regulatory concerns. The stock of Alza, known mostly for its transdermal patches such as NicoDerm for stopping smoking, fell more than 30%, or $11.88, to $27.75 in late trading on the New York Stock Exchange after the news was reported. Abbott’s stock soared $4.31 to $39.50, also on the NYSE. “We are obviously disappointed that we were unable to complete this transaction,” said Miles White, chief executive of Abbott. Abbott said in September that it was in discussions with the Federal Trade Commission over the divestiture of the U.S. rights to Alza’s prostate cancer treatment, Viadur. Abbott makes another prostate cancer treatment through its joint venture with Takeda Pharmaceuticals. Alza Chairman Ernest Mario said the company reached a supply-and-technology transfer agreement with a buyer for the prostate cancer treatment, but it was not sufficient for the FTC. The agreement hit another bump later in September when the Food and Drug Administration said one of Abbott’s plants was not in compliance with quality assurance regulations. Abbott had agreed to pay $100 million and to temporarily stop making almost 300 medical-testing devices. The deal had valued Alza at about $53 a share initially, but after the FDA problems emerged, the value dropped to about $45. Mountain View-based Alza said it will record a fourth-quarter charge of $10 million to $15 million to cover the costs of abandoning the merger. The company said it expects fourth-quarter earnings to be in the range of 26 cents to 29 cents per share, compared with Wall Street projections of 45 cents, according to First Call Corp.