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Roche Makes Unsolicited Bid to Buy Ventana for $3B; Ventana Urges Nonaction

NEW YORK (GenomeWeb News) — Roche yesterday made an unsolicited bid to buy Ventana Medical Systems for around $3 billion, or $75 per share, 45 percent higher than Ventana’s closing price yesterday of $51.74.
Roche said this morning in a conference call that Ventana has not replied to the offer. However, Ventana, which has a market capitalization just under $2 billion, advised its shareholders through a posting on its Website to “take no action at this time,” and said the company’s board will review the offer and will make its recommendation within 10 business days.
Ventana’s shares surged on the news, trading up 50 percent at $76.98 shortly after the opening bell.
Roche said in a statement yesterday that acquiring Ventana, a tissue-based diagnostics company with headquarters in Tucson, Ariz., would “allow Roche to broaden its diagnostic offerings” and would be a complement to its in vitro diagnostics and cancer therapies.
One product that Ventana sells is a test that screens patients likely to respond to the Herceptin breast cancer medicine, which is Roche’s second-largest seller.
Roche said the $1 billion tissue-based testing market is growing at 10 percent annually, “twice the rate of the overall in vitro diagnostics market.” Key growth drivers in this market include test automation and standardization, the increasing incidence of cancer, and the increasing number of targeted cancer drugs requiring companion diagnostics.
Roche CEO Franz Humer said his company has made the unsolicited bid public after “multiple efforts to engage in meaningful discussions” with Ventana Chairman Jack Schuler did not result in any serious negotiations.
Roche also published a letter Humer sent to Schuler yesterday, which outlines the Ventana CEO’s “unwillingness” to discuss the “compelling” proposal, “or even to take my call today.”
The letter also offers a few details of what Roche depicts as several months of one-sided wooing, including dinners, e-mails, phone calls, and letters on the part of Roche executives to get Ventana to enter discussions about an equity investment, which Humer said would be a “partnership model similar to our longstanding successful relationship with Genentech.”
But according to Humer, Ventana made it clear earlier this year it was not interested in having Roche as a majority stakeholder. That approach having failed, Roche developed the offer for an outright cash purchase at $75 a share, which it asserts represents a 55-percent premium over Ventana’s three-month average and a 39-percent premium over the company’s all-time high bid price.
Humer also wrote that while his company “continues to prefer a negotiated transaction with Ventana,” Roche’s board has allowed management to commence this offering.
Roche Diagnostics CEO Severin Schwan said his company is an “ideal partner” and that the joining the companies would provide “an exceptional opportunity to create further value for patients, customers, employees and shareholders through an expanded, global diagnostics platform for tissue analysis.”
Ventana employs around 950 people and had $238.2 million in sales last year. In a conference call, Roche said it would retain Ventana's management team and employees as well as its Tucson headquarters.

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