Novartis offer for Chiron accepted

Novartis is to finally gain full control of Chiron after independent directors at the US vaccine maker accepted a sweetened $5.1bn offer for the 58 per cent of shares it does not already own.

In September, Chiron board members turned down a $4.5bn bid from the Swiss firm, describing its $40 per share cash offer as "inadequate".

The new offer, at $45 a share, represents a 23 per cent premium over the share price before the previous bid. The acquisition will boost Novartisí entrance into the potentially lucrative flu vaccine market, which has come to prominence since the escalation of fears about a global avian flu pandemic.

Analysts said Novartis would be able to make substantial investments in vaccine operations that Chiron had not been able to afford and that the deal would give the Swiss firm long-term leverage in both vaccines and blood testing.

"Given the growth in Chironís expense base in recent years, and the breadth of the companyís development, commercialisation and manufacturing infrastructure, we believe ample opportunity exists for Novartis to surpass guidance," said Sanford C Bernstein analyst Gbola Amusa, adding that the Swiss company could have paid up to $54 per share and still created value for its shareholders.

"It is a relatively good deal," said Karl-Heinz Koch at Lombard Odier Darier Hentsch. "You can argue about the strategic fit as Chiron has a number of challenges which have to be addressed.

Chiron, which had its US flu vaccine production licence revoked one year ago after contamination problems at its Speke plant near Liverpool, has recently recommenced shipping the vaccine to the US. Novartis chief executive Daniel Vasella has vowed to "turn around" the Chiron vaccines business, with investments in R&D and manufacturing.

Novartis has already spent some $8bn this year on two generic drugmakers and a further $660m on Bristol-Myers Squibbís OTC unit. It has also announced that it will open a major research centre in China, where it intends to locate foreign specialists.

The company said the move reflected the growing importance of the Chinese market rather than taking advantage of the countryís cheaper labour costs.