Swiss pharmaceuticals giant Novartis has raised its bid to buy the remaining stake in the world's fifth-biggest vaccine maker, Chiron, for $5.1 billion (SFr6.5 billion).
Novartis, which plans to revamp Chiron, says the acquisition provides it with growth platforms in the vaccines market and in the molecular diagnostic business.
The Basel-based company, which already owns 42 per cent of the shares in Chiron, increased its bid for the remaining 58 per cent to $45 a share, it was announced on Monday.
This is $5 a share more than the original $4.5 billion offer made back in September, which was rejected by Chiron.
Novartis said that its latest offer was unanimously approved by Chiron's independent directors.
The bid represents a premium of 23 per cent to Chiron's trading price ahead of the first takeover proposal. Novartis' shares rose 0.8 per cent on the news on Monday.
With the Novartis acquisition, changes are expected at California-based Chiron.
The company has been plagued by production problems at a plant in Britain, which has limited its ability to supply flu vaccines to the US. It said last week that it would not reach its full-year earnings forecasts.
"Our plan is to turn around the Chiron vaccines business, which will require investments in R&D [research and development] and manufacturing to increase quality and capacity, so that we can better meet customer demand and address public health needs," said Novartis CEO Daniel Vasella in a statement.
Novartis expects the takeover to result in savings of $200 million within three years.
Analysts said that the valuation was exactly in line with the sector average.
"It is a relatively good deal," Lombard Odier Darier Hentsch analyst Karl-Heinz Koch told Reuters. "You can argue about the strategic fit as Chiron has a number of challenges which have to be addressed."
Chiron, which employs about 5,400 people worldwide, has activities in vaccines, blood testing and biopharmaceuticals. Its overall sales in 2004 were $1.7 billion.
The diagnostics business would be merged with vaccines to form a new division, while biopharmaceuticals would be integrated into the existing pharmaceuticals business, said Novartis.
Global vaccines business
Novartis said that the acquisition would give it entry into the global vaccines business which is expected to experience accelerated growth over the next five years.
Earlier this month the US government awarded a $62.5 million contract to Chiron to pursue its development of an experimental vaccine against the H5N1 strain of the bird flu virus. This variant has killed 62 people across Asia.
Chiron's product portfolio also includes vaccines for disease such as rabies, polio, measles and rubella.
Novartis, which employs around 91,700 people, achieved net sales of $28.2 billion in 2004.
It has already splashed out $8 billion this year on two generic drugs makers and a further $660 million on Bristol-Myers Squibb's portfolio of non-prescription drugs.
swissinfo with agencies
Chiron was founded in 1981.
It has its headquarters in Emeryville (California).
It is the fifth-largest producer of vaccines.
Total sales for 2004: $1.7 billion.
The company employs around 5,400 people worldwide.
Novartis, which already owns 42% of Chiron, has offered $5.1 billion for the remaining stake in the US company.