In a statement released yesterday, Chiron said: "After thorough analysis and consideration of Novartis' offer to acquire the shares of Chiron it does not already own for $40.00 per share in cash, the independent directors of Chiron have determined that this offer is inadequate."
On 1 September, Novartis offered to acquire the approximately 58 per cent of Chiron shares that it does not already own for $4.5bn, having bought the remaining 42 per cent in 1995. The offer valued Chiron, which had annual sales of $1.7 billion in 2004 and earnings of $127 million.
Analysts reactions to the takeover offer have been mixed, with some emphasising the potential for Novartis to grab a slice of the fast-growing vaccines market, and particularly the influenza vaccine sector which is seeing rising demand as fears grow about the risk of another flu pandemic. On the other hand, Chiron's flu vaccine business is in the throes of major manufacturing quality-related problems that have yet to be resolved.
One suggestion doing the rounds is that Novartis sees the problems besetting Chiron at present as an opportunity to get control of the firm, which aside from vaccines also makes biologics and blood testing products, at a bargain price. It could also be that Novartis wants greater control over the company to tap into the growing vaccine market more effectively and tackle the production problems.
"Over the 10 years since Novartis has been Chiron's largest stockholder, Chiron has regularly discussed with Novartis a number of strategic initiatives, including mergers, significant acquisitions and other transactions," said Chiron in the statement. It stressed that its directors had not solicited Novartis' offer.
With the growing possibility of recovery at Chiron in the next few weeks - particularly as the US Food and Drug Administration (FDA) has now issued a favourable opinion on the remedial actions the company has taken to set its flu vaccine manufacturing plant in Liverpool, UK, in order - shareholders are likely holding out for a better offer.
Chiron's shares are currently trading at just under $43, the highest level since its manufacturing problems were first revealed in October 2004.