(Reuters) - Abbott Laboratories (ABT.N) said it would buy Alere Inc (ALR.N) for $5.8 billion to become a leader in point-of-care testing, a fast-growing market as physicians increasingly adopt rapid tests that speed up treatment.
Point-of-care tests provide results to doctors in a matter of minutes as they can be conducted in the physician's office, an ambulance or even at home.
Waltham, Massachusetts-based Alere, which has annual sales of $2.5 billion, makes tests for infections such as HIV, tuberculosis, malaria and dengue.
The deal comes at a time when deadly viruses such as Zika are spreading alarmingly across the globe, putting the spotlight on diagnostic test makers and vaccine developers.
It was not immediately clear if Alere or Abbott were involved in making tests for Zika, which has been linked to severe birth defects in babies.
"We view the deal positively as we think point-of-care testing is the fastest growing segment in the diagnostic market," S&P Capital IQ analyst Jeffrey Loo said.
The global diagnostics industry, which is roughly $60 billion in size, is growing at a rate of 5 percent, according to Goldman Sachs.
Abbott will pay $56 per share in cash, a premium of about 51 percent to Alere's Friday closing. Alere shares were trading at $53.95 on Monday. Abbott was down 0.7 percent.
Abbott, which makes products ranging from Similac infant formula to Ensure beverages for adults, has struggled to boost sales growth after it sold its developed-markets generics business to Mylan NV (MYL.O) in 2014.
The company, which spun out AbbVie Inc (ABBV.N) in 2013, reported lower-than-expected quarterly revenue for the first time in four quarters last week.
Canaccord Genuity analyst Mark Massaro said the deal helps Abbott become the undisputed global leader in point-of-care diagnostics and help diversify its business.
Abbott, whose 2015 worldwide diagnostics sales were $4.6 billion in 2015, said its total diagnostics sales would exceed $7 billion after the close of the deal.
The deal will immediately add to Abbott's earnings per share upon close and contribute significantly thereafter, the companies said.
Alere's net debt, currently $2.6 billion, will be assumed or refinanced by Abbott.
Evercore is the financial adviser to Abbott, while Kirkland & Ellis LLP is legal counsel.
JP Morgan is Alere's financial adviser, while Cravath, Swaine & Moore is legal counsel.