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Novartis poised to trump Crucell over Berna Biotech deal

Swiss pharma firm weighs up its options after announcing it is starting due diligence

The future of Berna Biotech is uncertain after Novartis announced it is thinking over a cash bid for the Swiss vaccine maker, which would rival an all-share offer made by Dutch biotech firm Crucell.

In a statement, Novartis said it had begun to look at Berna Biotech's books with a view to bidding for the firm to combine it with the recently purchased vaccine group Chiron, and stressed there was no guarantee that it would make an offer.

ìThe combination of Berna and Chiron would offer complementary geographic coverage and product ranges,î said the Novartis statement.

The Novartis announcement spells bad news for Crucell, which is yet to become profitable. Novartis has hinted that an all-cash bid would be a much more attractive proposition to Berna Biotech than Crucell's all-share offer, which some analysts have criticised.

ìIf we decide to bid, it would be a competitive all-cash offer of a higher quality than an all-share deal which would reflect the value of the company,î said Novartis spokesman John Gilardi.

Crucell responded to the Novartis announcement by confirming that it remained committed to the proposed transaction.

ìCrucell would like to remind shareholders that Crucell's offer is the only offer that has been made [and] it is recommended by the board of Berna,î the firm said in a statement.

Crucell's bid valued Berna Biotech at around 591m Swiss francs ($455m) when it was announced on December 1. Novartis' acquisition of Chiron in October signalled its intention to grab a foothold in the growing vaccines market, partly fuelled by concerns about an avian flu pandemic.

ìWe see this as a defensive move from Novartis, as Crucell and Berna combined would become the sixth largest independent vaccine company in the world, ranking just behind Novartis,î said Kempen Research analyst Max Berkelder.

Helvea analyst Olav Zilian said a deal would make perfect sense for Novartis: ìClearly this would represent a relatively small deal for Novartis and wouldn't preclude them from making further acquisitions.î

Crucell's offer of a share exchange is open until January 20, subject to final approval by shareholders of both companies in the second week of next month. Under Swiss law Novartis will have to make a rival bid at least three days before the Crucell offer closes.

30th September 2008

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