Axis-Shield of Dundee agrees to takeover by Alere

Axis-Shield's recommendation to shareholders follows a three-month battle for the Dundee firm

Shares in medical diagnostics firm Axis-Shield rose after it agreed to be taken over by American company Alere.

The move came after Alere sweetened its original offer for the Dundee-based company after a three-month battle.

Axis-Shield said it would recommend that shareholders accept the 470p per share bid, which is about 2% higher than Alere's initial offer.

Its shares, which have climbed by about 34% since Alere first pitched its offer in July, rose by 4% early on Thursday.

The revised offer values the company at £235m.

Last week, Alere raised its stake in Axis-Shield to 30% - the most it could buy in the open market - and lowered its acceptance threshold from 90% to 50%.

In a stock market statement, Axis-Shield said it still considered the offer "fundamentally" undervalued the company, adding that it expected Alere's revised acceptance condition to be met against a "volatile economic and market backdrop".

Axis-Shield makes a medical testing product for diabetes, branded Afinion, and another product for rheumatoid arthritis.

It is understood Alere wants Axis-Shield primarily for its point-of-care technology, which provides immediate, portable and convenient diagnostics.

In July, Axis-Shield rejected a £230m approach from Alere, which then took the 460p offer directly to Axis-Shield's shareholders in August.

Both companies have now agreed to extend the timetable for the revised offer so that it remains open for acceptances until 24 October.