Ventana Rejects Roche's Hostile Takeover Bid Sending Shares To An All-Time High

The hostile takeover battle being waged by Swiss pharmaceuticals giant Roche Holding against U.S. diagnostics maker Ventana Medical Systems is getting ugly. Ventana's outspoken CEO Christopher Gleeson said Wednesday Roche's $3 billion, $75 a share bid was "a non-starter" because it is "way below Ventana's value, as it doesn't reflect our growth potential and the investments we have made." Gleeson went on to scold Roche for "high-handed tactics being used in an effort to deprive our stockholders of fair value." Ventana's Board of Directors, whose respective members own 21% of its shares, advised shareholders to reject Roche's offer. Roche CEO Franz Humer responded in kind, saying the offer was "full and fair." Humer threatened unspecified actions at Ventana's next shareholder meeting, hinting he may run a slate of board members sympathetic to a Roche takeover. Roche wants Ventana because its pipeline of products includes tests to identify patients whose tumors may respond to drugs targeting specific genes, technology that would accelerate development and sales of new cancer drugs for Roche. Humer hinted that Roche may be willing to up its bid in a letter to Roche, saying "To the extent that you believe that Ventana has additional information that would support a valuation in excess of our offer, we would be willing to consider it in a negotiation with you." Ventana's shares rose 2.84% to an all-time closing high of $82.53 Wednesday, the 11th straight day they have closed above Roche's offer price.

Sources: Press Release I, II, Bloomberg, Wall Street Journal, Financial Times, AP, Reuters,
Commentary: Roche Offers $3 Billion for Ventana Medical; Shares Soar • Roche Recalls Contaminated Drug
Stocks/ETFs to watch: Roche Holdings (RHHBY.PK), Ventana Medical Systems (VMSI). ETFs: Pharmaceutical HOLDRs (PPH), iShares Dow Jones US Pharmaceuticals (IHE)
Related: Roche slide show detailing Ventana Acquisition [pdf doc]

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