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Coppersmith Capital Management LLC, which has a roughly 7 percent stake in Alere, made the claim in a letter to Alere investors, viewed by Reuters, ahead of an August 7 annual shareholder meeting, where four of the 10 seats in its board of directors are up for grabs.

Coppersmith is challenging the Waltham, Massachusetts-based company's slate of four nominees to the board and has urged Alere shareholders to back three of its candidates instead.

In its plan, Coppersmith calls for Alere to exit its non-core businesses including its health care management business -- called Health Information Solutions -- its consumer products joint venture with Procter & Gamble, and, possibly, its toxicology unit.

The hedge fund argues that Alere's stock price performance has punished stockholders, delivering a negative 30 percent five-year total return as of the end of May versus a positive 14.2 percent overall return for the NYSE Composite index.

Shares of Alere ended trading at $24.75 on Friday. Coppersmith has put forward a plan it says can generate a stock price for Alere of $43 to $58, representing a premium of between 74 percent and 134 percent.

Even if Alere shares did not climb to such levels on their own, Coppersmith's plan would give the company such value in the eyes of strategic and financial acquirers, the hedge fund said.

Coppersmith, founded by former partners of now-liquidated activist fund MMI Investments, argues that the asset sale proceeds, which it believes could total up to $3.8 billion, should be used to lower the company's debt. It has also said that cutting corporate overhead and spending could yield another $50 million to $100 million in yearly cost savings.

An Alere representative did not respond to a request for comment, while Coppersmith declined to comment.

In a letter to investors on June 27, Alere Chief Executive Ron Zwanziger, who together with his family has a 5.2 percent stake in the company, said Coppersmith's plan would destroy value and "appears to be designed to create a flurry of financial engineering activity at the expense of building a well-positioned business."

Alere has its own plan to restructure the business, launch new products and is engaged in active and ongoing discussions with multiple parties concerning the divestiture of several non-core businesses, Zwanziger said in the letter.

Coppersmith has previously argued that Alere should sell or close its struggling health management business, which it had built up through acquisitions worth $1.8 billion - with $1.4 billion of that amount already written off.

Alere's toxicology business offers drug testing products and services to hospitals, clinics, law enforcement agencies and rehabilitation centers and helps them detect drug or alcohol abuse. Larger rivals Quest Diagnostics Inc and Laboratory Corporation of America Holdings also make drug-testing products and services.

Alere itself toyed with the idea of selling the unit in the past. Chief Executive Ron Zwanziger said at the JPMorgan healthcare conference in January 2011 that the company had a "fair amount of debt" on the balance sheet and could opt to sell the toxicology business if needed to pay down debt.

Selling the profitable toxicology and the consumer products joint venture unit could trigger a sizeable tax. But Alere could offset the tax hit by selling the health management business first, to generate an "enormous" tax loss, Coppersmith has said.

Alere, which makes a range of diagnostic tools such as home pregnancy tests and fertility monitoring kits, expanded its disease management operations with the $900 million acquisition of Matria Healthcare in 2008. It has a market value of $2 billion and total debt of $3.8 billion.

(Editing by Edwina Gibbs)