Daniel Vasella, chief executive of Switerland’s largest pharmaceutical group, Novartis, has stated that his company is willing to turn its back on a proposed merger deal with US vaccines maker Chiron, if it rejects its $40 a share offer.

In an interview with Swiss newspaper Le Temps, Dr Vasella explained that Novartis has made what it terms an attractive bid for Chiron, but warned that “if we don’t find common ground, well, it won’t happen.”

News of the proposed merger first broke earlier this month, when Novartis announced its cash offer of $4.5 billion to acquire the remaining 52% stake in Chiron [[01/09/05a]]. Novartis already owns a sizeable 42.2% chunk of the firm, and has three directors sitting on the board.

However, Chiron’s first response was to snub Novartis’ offer, on the grounds that its independent directors felt it was “inadequate,” [[06/09/05a]] a view shared by certain industry analysts. Karl Heinz Kochat of Lombard Odier Darier Hentsch argues that "a price tag of $45 per share would still be reasonable," representing an increase of around 13% from the original offer to $5.1 billion. However, the analyst says it is unlikely that Novartis would be willing to raise its offer to $50 per share. "That's the kind of increase you might see in a hostile takeover," he said [[07/09/05e]].

Chiron would represent a welcome addition to the Novartis universe, 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. However, considering Dr Vasella’s latest comments, chances of the deal going ahead seem to be fading.