Abbott Laboratories (NYSE: ABT) will not sell its primary in-vitro and point-of-care diagnostics businesses to General Electric (NYSE: GE) as planned, both companies say, due to a disagreement on the final terms of the $8.13 billion proposal.

Despite being approved by regulators in the U.S. and Europe, GE says that it was in both of their best interests to terminate it. The move would have given GE its first entry into the laboratory testing space.

The Wall Street Journal believes that the breakup may have been related to the continued regulatory problems at Abbott's Irving, TX, manufacturing facility. The unit has been problematic for Abbott, with $100 million in fines back in 1999. The FDA called Abbott's devices "adulterated" and "misbranded," which could have made GE nervous about taking on regulatory issues.

Some analysts say the deal's failure is a good thing because they think GE was overpaying. "Health care," says JP Morgan's Stephen Tusa in the Journal, "is still a place that we want to see them invest."

Abbott said the decision to cancel the contract would have no impact on their previously issued second-quarter or full-year guidance, excluding specified items. JP Morgan told investors this morning to buy shares of Abbott on the weakness from the news, saying that while the break-up is a setback, the company's broader plan is still intact.

Summer Street Research believes the lack of a deal between GE and Abbott could fuel speculation that one of them may now be interested in pursuing Ventana Medical Systems (NASDAQ: VMSI), the medical equipment supplier that recently rejected a $3 billion hostile offer from Roche Holding Ag (OTC: RHHBY).

In a move that could complement its other recent acquisitions, Roche Holding Ltd (OTC: RHHBY) yesterday made a $75-a-share hostile bid for Ventana Medical Systems, Inc (NASDAQ: VMSI). The $3 billion cash offer would allow Roche to gain a test Ventana developed to screen patients who could respond to the Swiss pharmaceutical giant's breast cancer medicine, Herceptin. The main goal of acquiring Ventana would be to "move closer toward delivering tools to select the right drugs for the right patients, rather than saving costs," Roche CEO Franz Humer told the Wall Street Journal.

Roche has already agreed to three other diagnostic acquisitions this year: The company agreed to buy CuraGen Corporation's (NASDAQ: CRGN) 454 Life Sciences in March for $140 million, allowing it to gain the company's DNA-mapping technology, and later agreed to acquire BioVeris Corporation (NASDAQ: BIOV) for $600 million and NimbleGen Systems for $272.5 million. The acquisition of BioVeris will add a screening technology that stimulates cells to emit light, while the NimbleGen acquisition would add more genetic tools for drug research.

Should an acquisition be seen as a sure thing? No, executives at Ventana said. Although Roche has made several friendly efforts to engage in "meaningful discussions" with Ventana's chairman and board concerning a transaction, Ventana has so far rebuffed Roche. The company advised shareholders in taking any action in response to the offer, but said the Board would review Roche's offer and make a recommendation within 10 days. What may make this particular offer different is that the $75-per-share offer was nearly 45% higher than Ventana's closing price of $51.74 yesterday.

In the event of an acquisition, Roche said it would operate Ventana as a separate unit within its diagnostics division, allowing it to retain its management team and employees as well as its headquarters in Arizona. This would be a similar agreement to the one Roche maintains with U.S. biotech company Genentech Inc (NYSE: DNA), which is majority-owned by Roche but is managed as an independent company.

Based on a potential acquisition, analysts believe that biotechnology companies Gen-Probe Incorporated (NASDAQ: GPRO), Luminex Corporation (NASDAQ: LMNX) and Cepheid Inc (NASDAQ: CPHD) could be potential acquisition targets based on their technology platforms and product offerings.