Laboratory News

Roche Purchases Ventana by Offering Higher Price

On Tuesday this week, Roche Holdings, AG  (VTX:ROG.VX) announced that it had entered into an acquisition agreement with Ventana Medical Systems, Inc.  (NasdaqGS:VMSI) of Tucson, Arizona.  Roche upped its original bid to $3.4 billion to make the deal happen.  It will now pay $89.50 for each share of Ventana stock. That is a 19.3% premium from the second offer Roche made on June 27, 2007. It is also a 72.3% premium over Ventana's closing price of $51.95 on June 22, 2007, which was the trading day prior to the announcement of Roche's initial tender offer.

Although it appears that Roche has prevailed in its efforts to acquire Ventana, there is still active opposition. Forbes Magazine reports that, despite the fact that Ventana's board approved the terms of the announced deal, there remain potential hurdles to the takeover. According to Forbes, the board approval "was over the objections of [Ventana] Chairman Jack Schuler and Vice Chairman John Patience. Neither has agreed to sell their shares to Roche. That's 12% [of outstanding shares] against the deal."

As Dark Daily readers know, the battle between Roche and Ventana became public last June. That's when Roche surfaced with a hostile tender offer for Ventana. Roche stated that, over the previous 12 months, it had attempted to launch acquisition talks with Ventana, but had been rebuffed each time. The amount of the offer surprised Wall Street. It was $3 billion for Ventana, which ended 2006 with sales of $238.2 million.

Roche believes that Ventana Medical Systems is a good fit for two reasons. First, Ventana's portfolio of markers will help Roche push forward with personalized medicine. In the short term, Ventana has an assay for Her2Neu that can help determine whether a patient is a candidate for Herception, which is Roche's second best-selling therapeutic drug. Second, Roche Diagnostics is a global player in molecular diagnostics. Ventana's products for specimen preparation and automated systems for histology laboratories will give Roche a broad range of products to offer molecular laboratories.

For the laboratory industry, Roche's willingness to pay a premium price for Ventana-and to aggressively pursue this acquisition over seven months of active opposition-are reminders that molecular diagnostics is a hot growth sector in laboratory medicine. Further, it is another example of the ongoing consolidation that continues to take place among in vitro diagnostics (IVD) companies.

Related Information:

• Roche to Acquire Ventana for $89.50 per share
• Roche/Ventana Deal Could Unravel 
• Roche's Higher Offer Wins Ventana After Seven Months