NOVARTIS began a $4.5 billion (£2.5 billion) drive into the vaccines market yesterday with a surprise offer to buy the remaining shares in Chiron, the troubled American flu jab maker, that it does not already own.

The Swiss company is offering $40 a share in cash to increase its 42.2 per cent stake to 100 per cent. The offer, which is pitched at a 10 per cent premium to Chiron’s closing price on Wednesday night, values the company at $7.8 billion.

Novartis said that it would seek to negotiate a merger agreement with Chiron’s directors after recently conducting due diligence on the company. Novartis added that it hoped to close a deal quickly, but cautioned that there could be no assurance that agreement with Chiron could be reached.

Chiron said that its tenmember board would meet within the next few days to discuss the offer. The three directors representing Novartis would sit out of the discussions, the company said.

Shares in Chiron, which closed on Wednesday at $36.44, rose $43 in early trading in New York — just $1 shy of the level at which they were changing hands last October before regulators closed down a crucial manufacturing facility in Liverpool. On Wednesday the company said that it was on track — subject to a final set of tests by US regulators — to resume manufacturing flu jabs for the 2005-06 immunisation programme.

A Novartis spokesman said: “We believe that we are in a better position to help Chiron solve its key issues as a wholly owned subsidiary. This is the best option for all concerned.”

Analysts expressed disappointment that Novartis had not built more of a premium into the bid but conceded that it would probably be enough to persuade shareholders, who have largely lost faith in the management. “There’s a lot of resentment that no one fell on their sword as a result of the Liverpool shutdown,” said one, who declined to be named.

Chiron operates a successful blood-screening unit, which develops products to help doctors to screen for HIV/Aids and hepatitis C viruses as well as a research arm that specialises in developing a range of treatments for infectious diseases and cancer.

However, it is the company’s portfolio of 30 vaccines that generates the bulk of its $1.7 billion annual turnover and that is most attractive to Novartis.

In particular, a deal would catapult the Swiss drug maker into the highly competitive market for flu inoculations, currently dominated by Sanofi Pasteur. The vaccines arm of the French drug group Sanofi-Aventis is expected to make about 51 per cent of the 300 million doses due to be produced this season. Chiron, meanwhile, is expected to produce about 25 per cent and GlaxoSmithKline will make about 11 per cent.

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