Novartis has insisted that it will press ahead with its acquisition of vaccine and biologics firm Chiron, despite news that one of Chiron’s major shareholders intends to vote against the transaction.
ValueAct Capital, a $3 billion dollar hedge fund that bought shares in Chiron when the price of the stock was hit by a production problems for its widely-used Fluvirin vaccine, has said it will fight Novartis’ $45 a share offer, saying it is not high enough. The hedge fund owns around 5% of Chiron’s stock.
Novartis, which is Chiron’s biggest shareholder and is trying to buy the remaining 56% of shares in the firm it does not already own, said it would continue to press for the terms agreed with Chiron’s management at the end of October, when it raised its offer for the company from $4.5 billion to $5.1 billion.
The company’s statement was issued after ValueAct Capital sent a letter to Howard Pien, Chiron's chairman, voicing its opposition to the deal.
"For Novartis to acquire Chiron for only $45 per share would be tantamount to stealing the company," said Mason Morfit, a partner in the firm. The hedge fund insists that Novartis’ offer, made on the back of the problems Chiron at Chiron’s manufacturing facilities, does not reflect its value or come at an appropriate time.
Meanwhile, ValueAct Capital is also claiming that Novartis’ position on Chiron’s board meant that it had access to insider information and could make a low offer for the firm, while being in a position to see its future value - unlike other Chiron shareholders.
In a statement, Novartis said: “the $45 per share price is fair to Chiron's shareholders.” It predicted that once the definitive terms of the agreement are voted on, “shareholders representing a majority of Chiron's public shares will …vote to approve the transaction.” Other major shareholders in Chiron include Citigroup, Morgan Stanley and Barclays Bank.
The Swiss drugmaker intends to combine Chiron with some of its in-house businesses to create a vaccine and diagnostics division, headed by Joerg Rheinhardt, currently Novartis' global head of pharma development. Chiron's biopharmaceutical business will be subsumed into Novartis' pharmaceutical division.
Novartis is also considering making an offer for fellow Swiss company Berna Biotech, another vaccine maker.