Basel-based provider of pharmaceuticals and diagnostics, Roche, and Ventana Medical Systems today announced having signed a definitive merger agreement for approximately $3.4 billion.

This offer represents a premium of 4.9 per cent to Ventana's closing price on 18 January 2008 and 19.3 per cent premium to Roche's initial offer on 27 June 2007, making it a 72.3-per cent premium to Ventana's closing price on the last trading day prior to the announcement of Roche's initial offer on 22 June 2007.

"We are very pleased that we were able to reach an agreement with Ventana," said Franz B. Humer, chairman and CEO of Roche. "Our combined company will be uniquely positioned to further expand Ventana's business globally and together develop more cost-efficient, differentiated and targeted medicines

Under the terms of the agreement, Roche will increase the purchase price in the tender offer for Ventana common shares to $89.50 per share in cash amounting to approximately $3.4 billion on a fully diluted basis.

In turn Ventana's board of directors, who have approved the transaction, will recommend the proposal to their shareholders. Under the terms of the merger agreement Ventana  shareholders have till 7 February to tender their shares.

Christopher Gleeson, Ventana's president and chief executive officer, will continue as CEO of Ventana's business following completion of the transaction and become a member of the Roche Diagnostics executive committee. Ventana will continue to be based in Tucson, Arizona
 
"I am confident that Ventana's unique position at the forefront of the emerging field of companion diagnostics and its robust growth in both advanced staining and primary staining ideally complements the strong position of Roche in the field of diagnostics and oncology over the long term," said Gleeson.

Roche is the world leader in in-vitro diagnostics and drugs for cancer and transplantation, a market leader in virology and active in other major therapeutic areas such as autoimmune diseases, inflammation, metabolism and central nervous system.

It is one of the first major pharmaceutical companies to have ventured into the area of diagnostics. With a majority stake in Genentech, Roche already has a strong position in biotechnology. Acquiring Ventana would help it build on its diagnostics presence, where it currently has in-vitro, molecular and clinical chemistry diagnostic products.

The Ventana acquisition would also give it access to technology that helps researchers and doctors better select the right drugs for individual patients - an emerging concept known as personalised medicine. Proponents of personalised medicine say it could reduce the costs and risks of developing drugs.

The current cost of new drug development and the risks of failures in trials could be reduced if diagnostic technology identifies patients with the best chance of benefiting from a particular medicine. Similarly testing could also screen out patients who might have negative reactions to the medicine in trials.

The acquisition of Ventana, a leader in the fast-growing histopathology (tissue-based diagnostics) segment, will allow Roche to broaden its diagnostic offerings and complement its world leadership in both in-vitro diagnostic systems and oncology therapies.

Christopher Gleeson, Ventana's president and chief executive officer, will continue as CEO of Ventana's business following completion of the transaction and become a member of the Roche Diagnostics executive committee. Ventana will continue to be based in Tucson, Arizona

Gleeson, said, "Ventana's board of directors has been dedicated to ensuring that any strategic value creation opportunities with Roche or other third parties would adequately reflect the inherent value of the company, its steady growth momentum, and the magnitude of potential synergies in a combination.

"After a full evaluation of its strategic alternatives and thoughtful consideration, as well as consultation with our outside financial and legal advisors, our board believes that the transaction with Roche at $89.50 per share is in the best interests of our shareholders, and we recommend that our shareholders tender into this revised offer.