CHIRON REJECTS NOVARTIS' $45 BILLION OFFER

Chiron has rejected Novartis' recent offer to acquire the biopharmaceutical company, saying the $40 per share cash offer from its largest stockholder is "inadequate."

Novartis, which already owns roughly 42 percent of the California-based vaccine manufacturer, recently made the $4.5 billion offer for the remaining 112 million shares.

Chiron and Novartis have had frequent discussions about "a number of strategic initiatives, including mergers, significant acquisitions and other transactions, including transactions initiated by Novartis," as well as Novartis' plans for investing in the company, but Chiron's independent directors did not solicit the Novartis offer, the directors said in a recent statement.

"We are pleased by the fact that Novartis continues to recognize Chiron's promising prospects," the statement said. However, after careful consideration, the directors "have determined that this offer is inadequate," according to the statement. A Novartis spokesman declined to comment on whether the company plans to increase its offer.

Chiron's shares traded as high as $46 a year ago, but the firm's stock has slumped in the wake of manufacturing problems that halted production of Fluvirin, its primary influenza vaccine.

Novartis would have gained control of Chiron's vaccines business, which includes more than 30 products. The global vaccines market could reach $10 billion by 2007, financial analysts have predicted.

Novartis made its offer one day after Chiron announced it had made progress on alleviating manufacturing problems at its Liverpool, England, plant, which has been inactive for nearly a year. The UK's Medicines and Healthcare products Regulatory Agency (MHRA) last October required Chiron to suspend operations at the plant because the company violated UK good manufacturing practice regulations. The suspension reduced the U.S. supply of flu vaccine by nearly 50 percent last winter. Widespread shortages prompted some facilities to provide vaccinations to only at-risk patients such as the elderly, the young and those with chronic illnesses.