Shares of Ventana Medical Systems shot up 52% to $78.69 in AH trading Monday after Roche Holding announced it is launching a $3 billion all-cash hostile offer for the company. The $75-per-share price represents a 45% premium to Monday's close. Roche claims it made "multiple efforts to engage in meaningful discussions with Ventana's chairman and board concerning a negotiated transaction" but was consistently rebuffed, leading it to launch the unsolicited bid. Ventana manufactures clinical systems that analyze human tissue in the diagnosis and treatment of cancer and other diseases. Its technology is used, among other things, to personalize drugs for individual patients. It posted Q1 earnings of $18 million ($0.50/share) on sales of $64.4 million versus earnings of $5.02 million ($0.14) on sales of $54.1 million a year earlier. It also raised its full-year 2007 EPS guidance to $1.27, with sales projected at $285-289 million. According to Roche, the tissue-based testing market is valued at $1 billion and expanding 10% a year, twice as fast as the overall in-vitro diagnostics market. "Roche sees the company as a strategic investment for both its therapeutic and diagnostic business," Morgan Stanley said in a note. Roche CEO Franz Humer told journalists Tuesday he still hoped the bid could turn friendly, but would not comment on whether he planned to sweeten it.
Sources: Press release, Bloomberg, Reuters I, II, TheStreet.com, Wall Street Journal, Dow Jones
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Stocks/ETFs to watch: Roche Holding Ltd. [ADR] (OTCQX:RHHBY), Ventana Medical Systems, Inc. (VMSI). ETFs: Pharmaceutical HOLDRs (NYSEARCA:PPH), iShares Dow Jones US Pharmaceuticals (NYSEARCA:IHE)
Related: Roche slide show detailing Ventana Acquisition (.pdf), Roche has scheduled a conference call for 8:00 a.m. ET, June 26, 2007. Dial 1-866-291-4166. A webcast will be available at http://www.roche.com/investors or by dialing 1-866-416-5255, ID 313#.
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