Medical Device Daily Associate

In the ongoing saga chronicling the battle to acquire Vision Systems (Melbourne, Australia),Cytyc (Marlborough, Massachusetts) yesterday reported what it called "three significant positive developments." Cytyc recently made an offer for Vision of A$3.25 a share, totaling A$692 million ($517 million), attempting to trump the bid of rival Ventana Medical Systems (Tucson, Arizona).

First, it noted that the agreement between Vision Systems and Ventana has been formally terminated, with Vision's board of directors determining that Cytyc's offer is more favorable to Vision shareholders.

Cytyc also noted that the Australian Competition and Consumer Commission (ACCC) on Oct. 4 said that it has extended the timeline for its investigation into any acquisition of Vision by Ventana until Oct. 25.

Additionally, the Australian Takeovers Panel reported that it has declined to hear Ventana's challenge to Cytyc's pre-bid acceptance agreements for the Vision Systems shares.

"We are delighted with these developments," said Patrick Sullivan, Cytyc chairman, president/CEO. "We have heard from customers who are concerned about any acquisition of Vision Systems by Ventana. We are not surprised by the ACCC's decision, which indicates the complexity of this issue. In our view, such a combination will block healthy competition and is merely a defensive strategy by Ventana to acquire a key competitor who has better technology."

Cytyc also reiterated that Vision Systems shareholders can receive cash for their securities within five days of accepting Cytyc's offer, and it urge shareholders to accept it now.

While the company appears confident that it will win the bidding war for Vision, it is still not out of the dealmaking woods yet. Original suitor Ventana said it is "exploring options" on what to do in the wake of Cytyc's recently sweetened offer (Medical Device Daily, Oct. 5, 2006).

Ventana said one of the options that it is contemplating is a potential cooperative effort with another potential rival bidder, Danaher (Washington), to acquire Vision. That, it said, "is under active consideration."

While Vision has stated that the Cytyc offer is superior, it has stopped short of endorsing that bid.

Perhaps holding out for a still higher offer from Ventana?

In other dealmaking news:

• Andover Medical (North Andover, Massachusetts) reported that it entered into a reorganization agreement on Aug. 31 to spin off the businesses of the company's former entity, Snow & Sail Sports , replace its management and change its corporate name to Andover Medical.

Andover is building a single source provider of orthopedic, podiatric and urological durable medical equipment and incontinence treatment solutions.

The company will be seeking to complete a bridge financing and a subsequent Series A financing. The proceeds will be used by the company to further its business plan.

• Xythos Software (San Francisco), a developer of basic content services solutions, reported that it has signed a software license agreement with the University of Texas system (UT; Austin) which, Xythos said, will simplify how the university's nine academic and six health institutions license the company's software.

Existing UT system Xythos customers can also use the agreement to streamline product upgrades. No financial details of the agreement were disclosed.

Xythos reported already more than 125,000 licensed users in the UT system using its technology to address academic and administrative document collaboration requirements.

Xythos applications are currently installed at the UT Arlington, UT Austin, UT El Paso, UT Health Science Center at Houston, UT San Antonio, and UT Tyler.

UT Austin was an early adopter of Xythos and helped negotiate the master agreement with the software company. WebSpace, UT Austin's Xythos-based service, is used to host student and faculty web pages, provide online storage for class materials, simplify research collaboration, and even reduce campus printing costs.