Through The Fly’s Eyes: Roche and Ventana

from Louis Jacobs of Theflyonthewall.com

Ventana’s Stalling Tactics

Swiss pharmaceutical giant Roche (RHHBY) is attempting to buy out diagnostic system maker Ventana Medical Systems (VMSI) and has a $3B – or $75 per share – offer on the table. This is the third time Roche has extended this offer, but it’s also the third time that Ventana shareholders have held out asking for more.

Roche has signaled that it has no intent to up their offer, with CEO Franz Humer saying he was fully confident that Ventana would come around, especially with nobody else bidding for the company. Ventana CEO Christopher Gleeson disagreed, saying there are no corporate issues between the companies, but mostly about the value. Gleeson believes the company can get more than $75 per share.

Analysts agree and think that Roche might have to up the stakes to change the shareholders’ minds. Nick Draeger of Adamant Biomedical Investments says that “they’re going to have to [raise the offer]. They don’t seem to be able to persuade enough investors to unload stock. It seems to be a real cat and mouse game.” Leernik Swann analyst Bruce Cranna also believes Roche’s offer is undervalued and when a deal is finally made, it could be worth $92-$95 a share.

The stock market seems to agree. Ventana’s shares, while down $1.67 in today’s trading, are still above $75 at $86.27. This is only slightly lower than the company’s 52-week high of $88.70. Roche’s shares don’t trade in the US.

While Roche is Ventana’s only bidder, the Swiss giant desperately wants to get into the diagnostic field and this might be the company’s best chance. Roche keeps affirming the same offer, but Ventana’s shareholders know their value and can feel Roche's desperation. With everything going in Ventana’s favor, the company would do best to wait for Roche to increase their offer. It would be a win-win for both companies.