Swiss pharmaceutical giant Novartis says it will not make a takeover offer for Bern-based vaccine maker Berna Biotech.
The announcement paves the way for Crucell, a Dutch company, to make good its own offer and comes a month after Novartis said it was considering making a cash bid.
The Novartis decision sent the Berna share price reeling at the stock exchange in Zurich. At close of trade on Tuesday the stock was down 8.3 per cent on Monday's close at SFr14.35 ($11.20).
"After completion of due diligence and an assessment of the potential benefits and risks of an acquisition, Novartis has decided not to make an offer for Berna Biotech," Novartis said in a two-line statement on Tuesday.
Analysts at Dresdner Kleinwort Wasserstein said the decision not to make a bid was good news for Novartis investors since it implied the group would not overpay or buy something just for the sake of it.
The Dutch concern's shareholders voted in favour of the Berna takeover at a meeting on Tuesday.
Berna's shareholders will meet on Wednesday to discuss approval of Crucell's offer of approximately SFr580 million ($450 million).
The target company's management is in favour of the Crucell bid.
CEO Ronald Brus said in December that the takeover of Berna would enable Crucell to compete as a leading independent vaccine player on the market.
He said the main goal was to boost growth and not to save costs. Under the terms of any deal, the merged company would be known as Crucell.
Novartis entered the ring in mid-December 2005 a few weeks after Crucell, a biotech company specialising in the development of vaccines for infectious diseases, made its own interest clear.
Novartis had bought United States vaccine maker Chiron in September and speculation mounted that it would buy Berna to consolidate this acquisition.
Experts say Novartis is likely to bid up to $15 billion for another Swiss biotech concern, Serono.
Shares in the Geneva-based company rallied on Tuesday on market speculation that a bid could be made within the next few days.
Berna Biotech, formerly Swiss Serum and Vaccine Institute, was founded in 1898 and has around 700 employees in Europe and South Korea.
Its shares have been floated on the Swiss stock market since 2001.
Last year the company had to abandon plans to produce a vaccine against the Sars pneumonia virus.
It is currently making a loss.
Crucell was set up in 1993 under the name IntroGene and has a workforce of around 200 people.
It is listed on Euronext and Nasdaq in New York.
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