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Ventana Medical Systems’ leading shareholders are still split over their course of action for the expiration of the tender offer with Roche scheduled for 7.00pm (EST).
Although at least three top-20 holders told dealReporter they have already tendered their shares or would do so tomorrow, there is still some dissension among others in the wake of last week’s SEC filing indicating that Ventana’s chairman, Jack Schuler and vice chairman, John Patience, would not be supporting the sale of the company to Roche for USD 89.50 per share.
A person familiar with the process confirmed that the tender offer is scheduled to expire today and then, depending on the number of shares tendered, if over 90% tender, there is no issue to closing. If over 50% tender, Roche can still close the transaction but would expect somewhere between one and three months to close the deal.
There are currently two distinct camps among shareholders - those that deem the offer as satisfactory, given the current credit and financing markets, and those that see no reason to tender, but would rather hold out as long as possible, as Roche cannot walk away before May, according to the merger documents.
One shareholder who voted in favor of the deal said he had heard from various sources that the company is relatively confidant of getting enough shares.
However, he did suggest that the timeframe provided by the person familiar could indicate that Roche will follow through with the tender, but if they do not have over 90% of the shares, Roche can proceed to complete a back-end merger process which would take the remaining period.
But a second shareholder, who has yet to tender his shares, said if shareholders are pushing for a higher price, then they will lose nothing by not tendering now.
”Even if you don’t tender you will have another opportunity to tender because [Roche] will have to extend it anyway,” the shareholder said. He added that the only factor that would be impacted is time, and that Schuler and Patience do not care about time more than they do about value.
Since coming out publicly and disclosing his position in media reports last week, Larry Feinberg at Oracle Partners told dealReporter that he still sees no reason to vote his shares. Feinberg, who has been a long-time holder of Ventana, said because Schuler and Patience (who collectively own over 11% total in Ventana) are not voting, he would also not vote. ”Why would I vote for it now? I have been following along Jack and John for about eight or nine years, when Ventana started in low single digits. They have done everything right so far, so why would I go against them now,” Feinberg said. Oracle owns 7.81% of Ventana.
However, Feinberg said if shareholders vote against the deal and Roche ”wins the day”, Roche could likely delay the payment for two months. Feinberg, as with a number of other holders interviewed, believe there is a chance that Roche will bump the bid.
”My sense is probably there is a good chance that this goes a little higher. It certainly has the possibility of it,” Feinberg said.
Although there is some belief that Schuler and Patience could change their opinion last minute prior to the expiration, Feinberg stated there is no chance of that. He said from his understanding, both board members wanted USD 95 per share, though settling for USD 93 could be an option.
As stated in the SEC filing, many financial analysts had estimated that Ventana’s core business could be worth USD 85 to USD 90 per share based on the company’s 2008 and 2009 financial projections, without taking into consideration the value of Ventana’s companion diagnostics franchise. The latter business is believed to be valued in excess of USD 20 per share, according to the filing.
But Feinberg said there is the view that Roche can just keep tendering until shareholders are worn down, but he said the risk is that Roche’s goal is to fill in Ventana and the management team as quickly as possible. He said the longer the process is, the more disruptive it is to Ventana’s business.
Proxy solicitors have been contacting shareholders in the past week, commented two shareholders. But another shareholder said he believed Roche would eventually receive all shares at the current price. He said that other shareholders need to recognize that the offer was finally agreed upon in a poor market climate and the company was fully shopped.
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