>>Law May Derail Roche Bid for Ventana
Friday July 6, 6:02 am ET
By Chris Kahn, AP Business Writer
Arizona Law May Derail Roche's $3 Billion Hostile Bid for Medical Equipment Company
PHOENIX (AP) -- An Arizona law could derail Roche Holding AG's hostile bid for Ventana Medical Systems Inc.
Roche acknowledged the situation last month in federal court documents. Through a subsidiary, the Swiss company is asking a federal judge to declare the Arizona Anti-Takeover Act unconstitutional.
The 20-year-old law restricts the voting rights of an outsider who buys 20 percent or more of the company's shares. That means Roche wouldn't be able to exercise its authority over Tucson-based Ventana for three years, even if it bought a controlling share of the company.
Roche filed its lawsuit June 29, four days after it announced a $3 billion tender offer that sent Ventana's stock soaring by 50 percent.
In its complaint, the company says the Arizona law would "irreparably harm" the company and Ventana stockholders and prevent it "from proceeding with the proposed merger ... for at least three years."
Lawyers for the Roche subsidiary, Rocket Acquisition Corp., did not immediately return calls Thursday, and Ventana officials declined comment.
The Arizona attorney general's office, which is named in the lawsuit, was still reviewing the lawsuit, spokeswoman Andrea Esquer said Thursday.
Ventana, which was started in 1985 by a University of Arizona pathology professor, builds medical equipment that helps doctors analyze human tissue. It also focuses on systems designed to speed up new drug discoveries and evaluate the safety of new drugs.
Roche, a Basel, Switzerland-based pharmaceutical company, wants Ventana because it is a leader in the $1 billion tissue-based testing market. When it announced its tender offer, Roche noted that the industry has been growing 10 percent annually, twice the rate of Roche's in-vitro diagnostic market.
"By making Ventana a member of the Roche Group, we can close the gap in the field of the fast growing tissue diagnostics market with attractive profitability," Erich Hunziker, Roche's chief financial officer, said in a conference call with analysts June 25.
In court documents, Rocket Acquisition asserts that the state's restriction on acquired shares is unconstitutional when applied to foreign corporations.
Citing other federal court decisions, Rocket said that "the extraterritorial reach of such state anti-takeover statutes creates an impermissible risk of inconsistent regulation." It adds that the law "imposes substantial burdens on interstate commerce that outweigh their putative local benefits."
Roche said Ventana previously rebuffed its overtures for a merger. It eventually went ahead with a hostile bid for Ventana, offering investors $75 per share, which is a 55 percent premium over Ventana's average closing price during the past three months. The offer is set to expire July 26 at midnight EDT.
Ventana's stock rose 59 cents, or less than 1 percent, to $77.80 in Thursday trading.<<
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Wondering why VMSI is up on this news. I bought some, but am tempted to bail with my profit to date. Seems as though this would make it less attractive to any white night, and one wonders why Roche would engage in a court battle that would probably drag on for a while just to get this munch done, much less compel it to offer a higher price. Or if they sweetened the offer, and the takeover is then backed by the board, does that skirt the law?
What am I missing?
Edit: took my $2.30/share and went home just now. When it comes down to obscure state law, I'm way out of my depth.
Cheers, Tuck |
