M&A

Ventana on Roche’s Arizona “Win”: So What?

Medical testing devices company, fighting a $2.77-billion bid from the Swiss health-care giant, says its defenses are in Delaware.
Roy HarrisAugust 23, 2007

Tucson-based Ventana Medical Systems Inc. reacted with some puzzlement to yesterday’s announcement by Roche Holding AG that it won a federal court injunction barring Ventana from using provisions of Arizona anti-takeover law in fighting Roche’s $2.77-billion bid. Ventana pointed out that it is incorporated in Delaware, where a shareholder-rights plan protects it.

“The court’s decision changes nothing,” a Ventana spokesman said. “Our Delaware rights plan is still in force and our board and management remain firmly of the view that Roche’s offer is inadequate, and given the extremely low count of shares recently tendered into Roche’s offer, it’s clear that the market agrees.” The spokesman added, “Ventana has never looked to or referenced the Arizona statute as a defense” against the Swiss-based health-care giant.

A Roche spokeswoman acknowledged that the Arizona ruling “was not a huge event; we agree on that case.” But she said Roche considered it “an important step in removing one of the takeover defenses they could have used.” In a separate case, she said, Roche is indeed seeking a declaratory judgment in Delaware Chancery Court, alleging that Ventana directors “breached their fiduciary duties to Ventana’s shareholders” in their consideration of the Roche $75-a-share tender offer. The Roche announcement yesterday did not acknowledge any action in Delaware, or note Ventana’s incorporation there.

The Roche complaint in Delaware, according to the spokeswoman, seeks to have the Ventana board compelled to redeem its poison-pill “or to render the rights plan inapplicable to the Tender Offer,” among other things. Roche wants the Delaware court to enjoin Ventana “from adopting any measure that has the effect of impeding, thwarting, frustrating, or interfering with the Tender Offer or the proposed second-step merger” that the acquisition plan envisions.

Winning such a ruling could be an uphill battle, since Delaware courts tend to support the business judgment of managers and board members, unless there is evidence of disloyalty to shareholders or that they are acting purely in their own self-interest.

The Ventana spokesman said that the his company’s view is that the Roche offer is “inadequate,” even though it is at a 44-percent premium. “As we have said all along: This is about value,” he said. Ventana believes it “is worth significantly more than Roche has offered, and we will not let them take value for their shareholders that rightly belongs to ours.”

As of the close of business Tuesday, the Associated Press was reporting that only about 13,430 shares of Ventana’s roughly 34 million outstanding had been tendered. Roche announced on Tuesday that it was extending its offer for Ventana through Sept. 20.

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