Novartis AG on Thursday offered $4.5 billion for the shares of US drugmaker Chiron Corp it does not already own, in a bid to take the Swiss group firmly into the vaccines business.
Investors quickly pushed shares of Chiron - a flu vaccine maker that has struggled to bring plants in England and Germany up to regulatory standards over the last year - above the Novartis offer price of $40 per share.
Valuing the US company at about $7.8 billion, or 4.6 times total 2004 sales, the Novartis offer for the remaining 42.2 percent of Chiron translates into a premium of about 10 percent to Wednesday's closing share price.
Shares of California-based Chiron rose to $43 in pre-market trade, just below the $44 level they reached last October, before the company's license to make a flu vaccine was suspended due to plant issues. "Despite the recent string of manufacturing disappointments, we believe that the ... premium offered to Chiron shareholders will likely have to rise," Deutsche Bank analysts wrote.
The deal could be completed promptly, Novartis said in a statement, but added "there can be no assurance that an agreement will be reached."
Analysts said the deal made sense strategically and would give Novartis access to a range of vaccines, at time when interest in vaccination is growing amid fears of a bird flu pandemic and hopes the technique could prevent more diseases.
Lombard Odier Darier Hentsch analyst Bob Pooler said that the deal would be relatively straightforward, if it came off, since Basel-based Novartis already had close relations with the company.
Shares in Novartis were trading 0.7 percent higher at 61.25 francs, as analysts welcomed the deal.
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