article VISION Systems suitor Ventana Medical Systems says it...

article VISION Systems suitor Ventana Medical Systems says it will not raise the $451 million value of its scheme of arrangement offer for the medical instruments company despite being overbid last week.

And the Tucson, Arizona-based company has again threatened litigation to try to win the day. The declaration that Ventana would not raise the value of the scheme had a sudden and dramatic effect on the Vision share price yesterday, slashing it by 34¢, or 12.6 per cent, to $2.35.

Ventana chief executive Michael Gleeson said the company would immediately file a third case against Vision — again for alleged infringement of a Ventana patent.

Ventana has already sued Vision twice for alleged infringement of patents surrounding the design of Ventana's automated tissue staining instrument.

Barely minutes after the Ventana statement was released, rival bidder Cytyc Corporation dismissed the threat of new litigation from Ventana.

Cytyc has offered $2.35 a share for Vision, valuing the company at $497 million.

"Before its announcement, Cytyc had done due diligence and understood all these (litigation) issues," a Cytyc representative said.

"Obviously Cytyc got pretty comfortable with them, or else it wouldn't have launched a bid in the first place," said the source, who asked not to be named.

Although no one in the Ventana camp would confirm it, it seems Ventana may be considering a straight bid for Vision. Mr Gleeson said that under the terms of the merger agreement signed with Vision, Ventana "expects to receive shortly a notice from Vision providing it with the right to match the price offered by Cytyc".

"If it does not match the offer, Ventana expects Vision to terminate the scheme," he said.

It is believed this would leave Ventana free to make a straight offer for Vision without breaching the "truth in takeovers" principle, although that would no doubt be tested before the newly strengthened Takeovers Panel.

Doubts have also been raised by the Cytyc camp about whether Ventana would be allowed to win control of Vision in North America.

Vision and Ventana are two of only three companies in the world making automated tissue-staining instruments for use in pathology laboratories and Ventana would have a dominant slice of the fast-growing US pathology instrument market if it acquired Vision.

Ventana needs Vision because Vision's Bond-maX tissue-staining machine is bigger and faster than Ventana's machines.

The machines have taken off quickly in the usually conservative world of pathology labs since they were released 18 months ago. Part of the success is because Vision's BioSystems division also owns the Novocastra reagents business, which makes the reagents used to identify whether the tissue being stained has cancer or not.

This is a much bigger operation than Ventana's reagent business and it also supplies some reagents to Ventana.