A Medical Device Daily

Based on the bidding war it has generated, Vision Systems (Melbourne, Australia) appears to be a very hot property. And getting hotter.

Cytyc (Marlborough, Massachusetts) late Friday reported that on Wednesday it intends to increase its all-cash tender offer to acquire Vision Systems to A$3.25 per outstanding share, or a total consideration of A$692 million ($517 million). It said it will declare its all-cash tender offer unconditional and pay shareholders who accept its all cash tender offer as soon as practicable, but in any event, within five days after acceptance.

The increased offer of A$3.25 per Vision Systems share represents a 53% premium to the A$2.13 price provided to Vision Systems’ shareholders under the proposal by Ventana Medical Systems (Tucson, Arizona) to merge with Vision Systems. The offering price is also more than $195 million greater than its own initial asking price for Vision that it made just over two weeks ago (Medical Device Daily, Sept. 15, 2006).

On Thursday, Ventana reported that it was acquiring a 12% stake in Vision to give it a “blocking” stake against rival bidders.

Cytyc apparently doesn’t see that as a deal stopper.

Patrick Sullivan, Cytyc president/CEO and chairman, said in a statement, “We decided to increase our offer to underscore our commitment to completing this transaction as soon as possible. We firmly believe that the combination of Vision Systems and Cytyc will provide the maximum benefit to customers of both companies while generating attractive value for both Vision Systems and Cytyc shareholders. Our increased offer is at a significant premium to the offer by Ventana and to the current Vision Systems’ share price reflecting increased interest from potential acquirers.”

He added that Cytyc’s offer “has already secured pre-bid acceptances from shareholders for about 25 million shares and 3.6 million convertible notes which convert into an additional 4.6 million shares.”

By announcing its intention to declare the tender offer unconditional, Cytyc said the offer will not be subject to any regulatory risks, including antitrust concerns, as it believes “is likely with Ventana’s proposal.” Additionally, it said that its offer “will not be affected by any current or future litigation from Ventana.”

Sullivan said that Cytyc’s offer is the only offer for Vision Systems “that provides certainty and the distinct timing advantage of a cash payment within five days of accepting our offer. We urge Vision Systems’ shareholders to take advantage of this certainty by accepting the Cytyc offer when it opens next week.”

Cytyc said it will incur certain one-time charges, which will be detailed at the close of the transaction. Excluding transaction-related expenses and transaction amortization, Cytyc expects the acquisition of Vision to be break even to modestly dilutive to non-GAAP adjusted earnings per share in 2007. The transaction is expected to be accretive to earnings per share in 2008.

Cytyc provides diagnostic and minimally invasive surgical products targeting cancer and women’s health.

In other dealmaking activity:

Talyst (Bellevue, Washington) and White Systems (Kenilworth, New Jersey) have reached a long-term agreement that will enable Talyst customers to benefit from the space-saving, inventory handling carousels manufactured by White Systems. It also establishes international marketing rights. Financial terms were not disclosed.

Talyst provides automation for the central pharmacy by integrating key medication handling technologies, including packaging, labeling, inventory and storage solutions, using the tagline, “Engineering the Intelligent Pharmacy.”

“Our dramatic growth is due largely to our ability to link key elements in the pharmacy supply chain, using our AutoPharm software to drive materials handling equipment that includes the mechanical carousels we market under the name AutoCarousel,” said James Torina, chairman/president/CEO of Talyst.

The carousel systems offer the highest level of security and item-picking accuracy – crucial benefits for pharmacy applications. White Systems also supports its carousels with a nationwide, dedicated service organization.

Further, Talyst gains the exclusive worldwide rights to market White Systems carousels to the pharmacy market, and the two companies agreed to collaborate to develop additional innovations that are specifically suited to pharmacy and other healthcare needs.

White Systems provides storage and retrieval solutions, serving all applications and industries.

Talyst provides automated systems to hospitals and other centralized pharmacies, to reduce costs and increase productivity, while improving accuracy and patient safety.