As was widely anticipated by the market, US company Chiron has snubbed a bid from Swiss giant Novartis to acquire it in a $4.5 billion dollar cash deal, or $40 per share [[01/09/05a]], [[02/09/05b]].
In a statement, the biopharmaceutical firm said: “After thorough analysis and consideration of Novartis’ offer to acquire the shares of Chiron it does not already own for $40 per share in cash, the independent directors have determined that this offer is inadequate.” The company also revealed that it has not solicited the offer, a move that flies in the face of rumours circulating last week.
Novartis already owns 42% of Chiron and has three directors sitting on the board. With more than 50 products on the market across the three business segments of vaccines, blood testing and biopharmaceuticals, as well as 2004 sales of $1.7 billion, Chiron would likely prove itself to be another feather in the Swiss firm’s cap. However, it now faces an uphill struggle to acquire the company, as it seeks to gain access to the fast-growing vaccines market.
Since the offer was made, Chiron’s shares – as expected – have risen above the $40 per share value. Last year, they were trading around the $44 dollar mark before the UK's drug regulator clamped down on its flu production facilities in Liverpool [[06/10/04b]]. However, the US Food and Drug Administration and the UK's MHRA have given the go-ahead for production to re-start and, although it is yet to be seen whether it will be able to supply the USA for the 2005/2006 ‘flu season, the news will be part and parcel of the lift in Chiron’s share price [[01/09/05c]].
Novartis will now be forced to raise its offer, Wall Street is betting. According to a report in the Financial Times last night, the Swiss giant has just four months to win Chiron’s independent directors over and secure its buy. Failing that, the case goes to arbitration to determine a fair price – although this process could be reportedly delayed until 2007.