updated 9/1/2005 9:26:32 AM ET 2005-09-01T13:26:32

Novartis AG said Thursday it is offering $4.5 billion in cash for the remaining stake in Chiron Corp. to complete its takeover of the U.S.-based biotechnology company.

The Basel-based drug maker 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.

"We believe that Chiron will have a better future as part of Novartis. This is the best option for all concerned, Chiron's employees, its shareholders and the patients, who rely on Chiron products," said Novartis spokesman John Gilardi.

Novartis, which originally bought the Chiron stake in 1995 as a financial investment, decided to make the offer after recently completing due diligence on Chiron, which allowed it to take a close look at the Emeryville, Calif.-based company's books to get a better picture of its overall financial situation.

Novartis said the Chiron takeover "provides us with an opportunity to create a strategic platform in vaccines."

Besides vaccines, Chiron is also active in high-tech blood testing _ using DNA technology among others _ and biopharmaceutical products focusing on infectious diseases and cancer. Novartis said the latter two activities would complement its own business.

Novartis' offer still hinges on Chiron shareholders. About half of the owners of the remaining Chiron stock must agree to sell their shares to Novartis in order for the offer to go through.

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.

But there was good news Wednesday, when U.S. Food and Drug Administration inspectors found Chiron's changes at its Britain manufacturing facility, which was closed last year because of tainted vaccines, "generally acceptable" at the end of a nine-day review.

Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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