The ball would appear to be firmly back in Novartis’ court after its takeover bid for Chiron Corp [[01/09/05a]] was firmly rejected by the latter’s board [[06/09/05a]], and observers are now wondering whether the Swiss giant will up its offer and by how much.

The US vaccines firm’s management had said that it has thoroughly analysed and considered the $40 per share offer made by Novartis to buy the 58% of Chiron stock it does not already own but considered it “inadequate,” a view some analysts share.

Karl Heinz Kochat Lombard Odier Darier Hentsch argues that “a price tag of $45 per share would still be reasonable,” representing an increase of around13% 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.

Meanwhile, brokers at AG Edwards say that $46 per share is the highest likely bid, while Prudential believes that Novartis could possibly be prepared to offer as much as $5.5 billion. Others believe that Novartis is unwilling to cough up much more after what has been an expensive year, what with the purchase of privately-held German firm, Hexal, and its partner, Eon Labs of the USA, in a 5.7 billion-euro deal [[21/02/05b]] and Bristol-Myers Squibb’s US and Canadian consumer medicines business for $660 million [[01/09/05h]].

Other possibilities are that Chiron’s three business units - blood testing and biopharmaceuticals, as well as vaccines - could also be broken up and sold off separately, Novartis might decide to sell its 42% stake or a rival bidder could make a move. For the moment, however, Chiron’s share price is on the rise and Novartis is remaining tight-lipped.