Diagnostic powerhouse Roche (Basel, Switzerland) said Wednesday it has been granted a preliminary injunction from an Arizona district court enjoining Ventana Medical Systems (Tucson, Arizona) from enforcing certain anti-takeover provisions related to Roche’s hostile $75-a-share takeover offer.
Roche also said it would extend its offer to buy Ventana until Sept. 20.
The company has had trouble generating interest in its tender offer, brought on no doubt in large part by its steadfast refusal to raise its offering price. As of the close of business Tuesday, about 13,430 shares have been tendered in the offer. Ventana says it has about 34 million shares outstanding.
Roche extended the tender offer once before. It was previously scheduled to expire Thursday.
The hostile takeover bid, valued at about $3 billion, was first disclosed publicly at the end of June (Medical Device Daily, June 27, 2007), after months of fruitless private advances.
Ventana has repeatedly rejected the bid, calling it “inadequate in multiple respects,” and the method used in its offer “high handed” (MDD, July 12, 2007). CEO Christopher Gleeson has told Ventana investors they should not cash out their shares at the offer price.
Ventana shares rose 11 cents to close at $82.38 Tuesday, and then gained 13 cents to $82.51 in after-hours trading, indicating that investors expect Roche to raise its per-share offering price.
When extending the offer period to Ventana shareholders this week, Roche maintained its veneer of inflexibility, saying that all other terms and conditions of the offer — including price — remain unchanged.
Roche’s decision to once again extend its unsolicited tender offer to buy all outstanding shares of Ventana for $75 a share has not swayed the Arizona company’s position on the offer.
“We remain steadfast in our position that Roche’s offer is wholly inadequate and our board of directors continues to recommend that stockholders not tender any of their shares to Roche,” Ventana said in a company statement. “Roche’s offer remains significantly below our current stock price, even with the recent tumultuous market conditions, proving that the market agrees that the offer fails to reflect the inherent value of the company, its steady growth momentum, and the magnitude of the synergies that would be unlocked in a combination with Roche. Ventana is an extraordinary company which, given the increasing focus on and significant value of companion diagnostics to pharmaceutical companies, is uniquely poised to benefit from the potential in the future of personalized medicine.”
Roche wants the deal to broaden its diagnostics business, one of the fastest-growing industries in the pharmaceutical sector.
Roche’s rationale to take over Ventana is part of the company’s strategy to buy midsize and small companies whose diagnostic products allow the Swiss firm to target drugs to individual patients and also bring drugs earlier to the market. Ventana argues that it can produce more shareholder value as a standalone company, given the firm’s cutting-edge technology and global reach.
The $75-a-share price represents a 44% premium to Ventana’s close of $51.95 on June 22, the last trading day prior to the announcement of Roche’s offer, and a 55% premium to its three-month average as of the same date of $48.30, Roche noted.
Greenhill and Citi are acting as financial advisors to Roche and Davis Polk & Wardwell is acting as legal counsel.
In other dealmaking activity:
• Medtronic (Minneapolis) and Bayer Diabetes Care (Tarrytown, New York), a division of Bayer Healthcare (Leverkusen, Germany), reported an alliance to distribute and co-market a new blood glucose meter for Medtronic patients outside the U.S. beginning in Canada and Europe.
Financial terms of the agreement were not disclosed.
The new meter, based on Bayer’s Contour® meter platform, will wirelessly transmit blood glucose test results directly to MiniMed Paradigm insulin pumps and Guardian REAL-Time continuous glucose monitoring (CGM) systems, the companies said. Wireless communications make data entry easier and more convenient for patients.
Bayer Diabetes Care will acquire exclusive rights to Medtronic’s wireless communications protocol in certain markets outside the U.S. The new meter will initially be introduced in Canada and Germany, followed by a phase I rollout in Europe and in other countries as agreed upon by the companies.
Medtronic markets the MiniMed Paradigm REAL-Time Insulin Pump and Continuous Glucose Monitoring System.
Medtronic also reported an exclusive U.S. agreement with LifeScan (Milpitas, California), a Johnson & Johnson (New Brunswick, New Jersey) company, to distribute and co-market new blood glucose meters to be developed by LifeScan for Medtronic patients.
Financial terms of the agreement were not disclosed.
The new meters will be built using the OneTouch platform and will wirelessly transmit blood glucose test results to MiniMed Paradigm insulin pumps and the Guardian REAL-Time CGM system. The initial meter offering will be available to Medtronic’s U.S. patients early next calendar year, with planned meter enhancements to be introduced later, the company said.
Data transmitted from the new LifeScan meter can be viewed via Medtronic’s CareLink Therapy Management Software for Diabetes, the only software that integrates meter, logbook, insulin pump and continuous glucose monitoring information to help patients and physicians more easily assess and manage diabetes, according to Medtronic.
LifeScan’s new meter will replace the Paradigm Link blood glucose monitor, which is being discontinued by BD (Franklin Lakes, New Jersey). Medtronic said it would continue to include the Paradigm Link monitor with its insulin pumps, and make test strips available to current users, until the commercial introduction of the new meter next year. The company said it anticipates no interruption in service during the transition of its blood glucose meter products.