Cytyc reviews Vision offer

US healthcare equipment maker Cytyc Corp is reviewing its $497 million bid for Australian medical technology outfit Vision Systems, which was yesterday slapped with a multi-million lawsuit.

US healthcare equipment maker Cytyc Corp is reviewing its $497 million bid for Australian medical technology outfit Vision Systems, which was yesterday slapped with a multi-million lawsuit.

Cytyc management is believed to be assessing the substance of patent litigation filed against Vision by Ventana Medical Systems. Ventana, an Arizona-based, Nasdaq-listed medical technology group, launched proceedings in the US Federal Court in Boston.

The lawsuit came just days after Ventana walked away from a $451 million merger previously agreed to with Vision, following Cytyc's overbid.

Ventana has left the door open for a second-round offer.

However, in an aggressive strike Ventana has demanded that Vision's Bond X and maX OCR products be withdrawn from the market.

Ventana has claimed damages, including 10 per cent of total sales.

Cytyc's $2.34 a share cash bid last week appeared to trump Ventana's conditional $2.13 a share offer.

But Cytyc's offer was also subject to a "no material change" clause, which could be triggered by expensive litigation. It is understood Cytyc could withdraw the bid if legal costs from the Ventana case looked likely to diminish Vision's EBITDA by $10 million, or would cost over $30 million of the company's net assets.

The threat of legal proceedings between Ventana and Vision has been looming since 2003 when an initial breach of patent case was lodged in the federal court in Boston.

Ventana successfully sued Vision for breach of patent, with the court demanding the product be removed from the market. Vision subsequently reintroduced the product in a modified form - but Ventana is now challenging the updated product.

Vision shares closed up 2c at $2.49.