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Roche is unlikely to succeed in invalidating Ventana’s poison pill, and will probably try other measures to proceed with its hostile bid to buy the diagnostics company, according to M&A experts.
The drug giant yesterday extended its takeover offer to 17 January from 1 November. Meanwhile, a ”boilerplate lawsuit” is pending in Delaware court - a district that has not forced a company to lift a poison pill since at least the late-1980s, according to William Lawlor, a partner at law firm Dechert, which is not involved in the case.
”These types of cases are very familiar - they’re typically instituted by any hostile bidder,” he said. ”The bottom line is that I don’t think they’ll get a pill redemption.”
In addition, Ventana’s poison pill expires in March, two months ahead of its annual meeting - another reason why a court would be ”reluctant” to force a redemption, he noted. Yet Lawlor suggested that Roche might file an injunction to block Ventana from extending its poison pill.
Ventana has continuously rejected Roche’s offer of USD 75 per share - a 44 percent premium - calling it ”inadequate.”
A spokesperson for Roche declined to speculate on the timing or outcome of the case.
Steven Davidoff, a law professor at Wayne State University, similarly noted that the current case is different from an earlier one in Arizona, where Roche emerged victorious. In that case, Ventana had tried to hide behind Arizona’s anti-takeover laws, even though the company was incorporated in Delaware.
Delaware courts have historically refrained from invalidating poison pills, he noted.
Since Roche is ”unlikely to win” in court, it might be encouraged to run a proxy contest to install a management team more supportive of a takeover, Davidoff said. That move would happen in the spring, to coincide with Ventana’s annual meeting.
Ventana has a staggered board, meaning that only a few directors are up for election at any given time, ”but it’s not an effective one” because shareholders can amend the bylaws to elect the entire board at once, Lawlor noted. ”That’s a big hole in the target company’s defense,” he said.
”Ventana looks to be very obstinate,” Davidoff said. ”Roche’s best bet is to take it to the shareholders directly.”
A spokesperson for Ventana called the litigation a ”sideshow,” adding that ”more than 99.5% of our investors have now essentially turned down Roche’s inadequate offer four times. It’s hard to fathom what Roche hopes to accomplish with the litigation.”
Roche has a market cap of USD 155.6bn. Ventana’s market cap is USD 3.05bn.
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