Roche, the Swiss pharmaceuticals and diagnostics firm, has begun a hostile move to acquire Tucson-based Ventana Medical Systems for $3 billion in cash. If successful, it would be Roche's fourth diagnostics-related acquisition in as many months, having just spent more than
$1 billion to purchase 454 Life Sciences, NimbleGen Systems, and BioVeris.
Roche executives say they spent five months fruitlessly trying to negotiate with Ventana's management. The acquisition now is contingent on Roche acquiring a majority of Ventana shares (company officers own a combined 21%) and the cancellation of a shareholder rights plan to prevent takeovers. Ventana's board has asked shareholders to hold off taking any action while it considers the offer, which represents a 55% premium over Ventana's recent average stock price.
With $238 million in 2006 sales, Ventana develops tissue-based testing for histopathology. This market is valued at nearly $1 billion per year and is growing about 10% annually, according to Roche.
Roche believes Ventana will bolster its position in personalized health care, particularly for oncology. By bundling its skills in drug development, diagnostics, and instrumentation, Roche could create targeted drugs for selected patient populations while providing the capabilities for monitoring patient treatment and response.
To woo Ventana's shareholders and its 950 employees, Roche executives are emphasizing certain aspects of the deal. They say they are driven not by cost cutting but by synergies in R&D and by the health care industry's need for targeted medicines. Roche also intends to invest in and expand Ventana's operations while running it as a dedicated business headquartered in Tucson.
Roche executives say they are still open to a negotiated agreement as the preferred option.