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Novartis offers $4.5b for Chiron

SAN FRANCISCO -- The Swiss pharmaceutical firm Novartis AG said yesterday it is offering $4.5 billion in cash to take over the pioneering Northern California biotechnology company Chiron Corp., which has fallen on hard times.

The Basel-based Novartis already owns 42.2 percent of Chiron and is now offering $40 per share for the remaining 57.8 percent, or 112 million shares, it does not already own.

The offer represents about a 10 percent premium to Chiron's closing stock price of $36.44 Wednesday on the Nasdaq Stock Market. Chiron's shares surged 18 percent, or $6.49 a share, to $42.93 at the close of trading yesterday, an indication that investors believe Novartis will increase its offer.

Chiron has been crippled this year by plunging profits and surging expenses resulting from a vaccine debacle last year, when problems at its British production facility kept it from delivering any of its Fluvirin flu vaccine to the United States. Chiron had been slated to supply about half the nation's vaccine.

Chiron's 2004 profit of $156 million and $1.7 billion in revenue was about half of what the Emeryville-based company earned in 2003. Novartis had profits of $5.8 billion and $28.2 billion in revenue last year and is the world's sixth largest drug company.

US shares of Novartis closed up 45 cents to $49.20 on the New York Stock Exchange.

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