Shares of Oro Valley-based Ventana Medical Systems Inc. closed nearly 50 percent higher Tuesday on news of a $3 billion buyout offer from Swiss drugmaker Roche Holding AG.
Ventana's board advised shareholders to take no immediate action on Roche's offer and said it would make a recommendation within 10 business days of the formal commencement of a tender offer.
Roche revealed late Monday that it was pursuing an all-cash, $75 per share offering for the company. After nearing $79 in after-hours trading Monday, Ventana stock closed Tuesday at $76.43, up $24.69 or 48 percent, in trading on the Nasdaq Stock Market.
Ventana's shares are traded under the ticker symbol "VMSI." The company ranks 90th on the Star 200 list of Southern Arizona's major employers, with 580 full-time-equivalent workers at the end of 2006.
Roche said it would fold Ventana into its diagnostics division but keep the company's headquarters and employees in Oro Valley.
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Roche said it is seeking Ventana to widen its diagnostic product offerings and complement its cancer therapies and "in-vitro" diagnostic systems — which involve testing samples in an artificial environment such as a test tube. Ventana competes in the $1 billion tissue-based testing market. According to Roche, that industry has been growing 10 percent annually, twice the rate of Roche's in-vitro diagnostic market.
"By making Ventana a member of the Roche Group, we can close the gap in the field of the fast growing tissue diagnostics market with attractive profitability," Erich Hunziker, Roche's chief financial officer, said in a conference call with analysts.
Bruce Cranna, an analyst with Leerink Swann, said the Roche offer looks good.
"It's a fairly big number," Cranna said. "And certainly Ventana fits with Roche. Of course, it's unclear whether Ventana wants to be bought."
The company builds medical equipment that helps doctors analyze human tissue. It also focuses on systems designed to speed up new drug discoveries and evaluate the safety of new drugs.
Roche Chairman and Chief Executive Franz Humer called the offer "compelling" with an attractive premium.
"We believe our proposal for Ventana represents a unique opportunity for both our companies and their respective stockholders," Humer said in a statement. "Ventana will be an outstanding addition to the Roche Group, and we believe we are the best strategic partner to capitalize on Ventana's potential."
Ventana would be Roche's fifth acquisition in three months if the deal is made.
In June, Roche announced that it would buy NimbleGen Systems Inc., a manufacturer of equipment for DNA analysis. In April, Roche said it would acquire the BioVeris Corporation, a health care and biosecurity company, and Therapeutic Human Polyclonals Inc., a privately owned biotechnology company based in California and Germany. The company said in March that it would buy 454 Life Sciences, a gene sequencing company.
Severin Schwan, CEO of Roche's diagnostics division, said in the conference call that the recent buys don't signal a change in Roche's business strategy.
"Each of these acquisitions has been very, very targeted and represent a building block to organically develop our existing business."
If it successfully buys Ventana, Roche would keep Ventana's headquarters in Tucson. "We believe that Ventana has an excellent team and we want to build on the momentum and success this team has achieved," Schwan said.
Did you know ...
Ventana Medical Systems Inc., originally called Immunodiagnostics Inc., was founded in 1985 by University of Arizona pathology professor Dr. Thomas Grogan, who hoped to automate lab testing for diseases such as cancer. In 1991, the company launched its first instrument system to automate preparation of tissue slides for diagnostics. Ventana went public with an initial public stock offering in 1996. In 2001, Ventana moved from a location near near West Prince Road and Interstate 10 to its current headquarters at 1910 E. Innovation Park Drive, Oro Valley.