Swiss drugmaker Roche Holding said on Tuesday it still hoped its $3 billion hostile bid for Ventana Medical Systems Inc. could turn friendly but declined to say whether it would sweeten the deal.
Analysts said Roche's bid, which it launched after efforts to negotiate a friendly deal were rebuffed, looked expensive but made strategic sense.
Roche Chief Executive Franz Humer said he aimed to continue the group's build-up of its diagnostics division beyond the Ventana deal through in-house development and the acquisition of technologies.
We've offered a very full premium and price and I would not speculate in any other direction, Humer told journalists.
The proposed acquisition would further boost Roche's diagnostics or medical testing unit, where it has already made a series of small- to mid-sized acquisitions this year.
The Basel-based company has agreed to buy 454 Life Sciences from Curagen Corp., as well as U.S.-based BioVeris Corp. and privately held NimbleGen Systems Inc.
Roche's offer of $75 per share in cash represents a 45 percent premium to Ventana's closing stock price of $51.74 on Monday on Nasdaq. Ventana shares jumped 52 percent to $78.75, signaling speculation a richer proposal would emerge.
Participation certificates in Roche, its most widely traded form of equity, were marginally higher at 212.10 Swiss francs by 0839 GMT, ahead of the Swiss blue-chip index which was 0.6 percent lower.
Acquiring Ventana, which specializes in tissue-based diagnostics, would give Roche, already one of the world's biggest diagnostic companies, access to technology that helps researchers and doctors better select the right drugs for individual patients.
That emerging concept, known as personalized medicine, could also reduce the costs and risks of developing drugs.
Analysts said the deal fitted Roche's expansion plans and the large premium also signaled the strategic importance of diagnostics.
The addition of Ventana would help Roche to build a strong position in cancer diagnostics, an area where Roche has not been very present in the past, Vontobel analyst Karl-Heinz Koch said in a note.
There is a strong strategic logic as Roche is the world leader in cancer treatments, particularly with targeted treatments, which require increasing use of cancer diagnostics to optimize treatment choices.
Although the full benefit of integrated diagnostics and pharmaceuticals is probably still years away, the deal would bring Roche close to that goal, Kepler Equities analyst Denise Anderson said.
Roche said the deal would be earnings positive in two to three years on an operating level, and that would turn positive for core earnings per share within four years.
More details on the proposed acquisition can be found here: http://www.roche.com/pages/downloads/company/information070625.html
(Additional reporting by Sam Cage in Geneva)