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Roche Offers $3 Billion for Diagnostics Firm

Billion-dollar deals used to be pretty rare in the medical device industry. We would see one or two a year, usually for not much more than $1 billion. But the Boston Scientific-Guidant deal changed all that. Now any company of any size can be considered a potential acquisition, and a number of multibillion-dollar acquisitions have been made in the past 12 months.

June 26, 2007

1 Min Read
Roche Offers $3 Billion for Diagnostics Firm

The Guidant deal may also have encouraged device CEOs to overspend, if they think their target is a particularly good fit.That may be the case with Roche Diagnostics, which according to Bloomberg News, has offered $3 billion to buy another diagnostics company, Ventana Medical Systems Inc. (Tuscon, AZ). That works out to $75 a share, which is a whopping 45% higher than Ventana's closing share price yesterday.Why would Roche pay that much of a premium? Because Ventana makes screening tests that can determine which patients are a fit for which drugs. Roche has been one of the firms at the forefront of the leap into personalized medicine, and Ventana's technology is something that can bring it closer to that goal. Also key is that one of Ventana's tests determines who will respond to a breast cancer drug made by Genentech -- whose majority shareholder is Roche. Indeed, today Ventana's share price has risen even higher than the $75 Roche offered, indicating investors think the company can get an even better deal.

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