Chiron Shares Continue to Climb Despite Rejection of Takeover Bid

Chiron Corp.’s stock continued to climb Tuesday as investors bet that the recently troubled biotechnology company would remain a takeover target despite its rejection of a $4.5-billion bid by Swiss pharmaceutical giant Novartis.

Shares of Emeryville, Calif.-based Chiron gained 72 cents to $43.51.

Tuesday’s trading was investors’ first chance to respond to Chiron’s Labor Day rebuff of Novartis’ $40-a-share bid to buy the third-oldest U.S. biotechnology company, behind Amgen Inc. and Genentech Inc.

Even before Chiron turned down the bid as inadequate, investors had been anticipating that Novartis would eventually up the ante -- a sentiment that appeared to deepen Tuesday.

“Historically, a company that pursues a takeover usually is willing to sweeten its offer, so I wouldn’t be surprised if Novartis does,” said industry analyst Aaron Geist of Robert W. Baird & Co.

Novartis, based in Basel, Switzerland, has been Chiron’s largest shareholder for the last decade, a relationship that might make it easier for the two companies to negotiate a deal.

In a statement Monday, Chiron said its board had held an “ongoing dialogue” with Novartis.

Chiron’s stock had been slumping until Novartis made its unsolicited offer last week. Since that bid, Chiron’s shares have surged nearly 20%.

But the company’s stock still hasn’t rebounded from a manufacturing debacle last year that crimped the United States’ flu vaccine supply and eroded Chiron’s profit. Chiron had been slated to supply about half the nation’s flu vaccine until British regulators pulled the company’s manufacturing license 11 months ago because of contamination problems at a major plant.

Despite its recent troubles, Chiron remains attractive, particularly given the rising concerns about the bird flu causing an epidemic around the world, Geist said.

What’s more, Chiron appears poised to bounce back from last year’s vaccine fiasco. Just last week, Chiron disclosed that U.S. Food and Drug Administration inspectors had found it had made “generally acceptable” changes at the British plant that was closed last year.