By Mary Welch
Chiron Corp. added $175 million in sales to its $1.2 billion in annual revenues as it completed the acquisition of Chiron Behring GmbH & Co. from Hoechst AG. The purchase price was $115.5 million.
Chiron, of Emeryville, Calif., bought a 49 percent interest in the Marburg, Germany-based vaccine company in July 1996 for $118 million. As part of that deal, Chiron had a five-year option on the remaining 51 percent beginning in March 1998 for $123 million.
The difference in the option and the final purchase price was due to currency fluctuations, said Jim Knighton, Chiron's vice president of investor relations and corporate communications.
Chiron Behring is the name of the joint venture formed when Chiron first purchased its stake in the vaccine company, Behringwerke AG, a subsidiary of Frankfurt, Germany-based Hoechst AG. (See BioWorld Today, Feb, 21, 1996, p.1.)
"The sale strategically helps us build our vaccine business, which is important to us for future growth, and it helps us achieve critical mass by adding over $170 million to our top line. This is a very profitable business," Knighton said. "It's an acquisition that helps us from a strategic and financial standpoint."
Chiron Behring's product line is a laundry list of pediatric and adult vaccines. The company has a strong local presence and also markets its products throughout Europe, Asia, the Middle East, Africa and South America.
Its lineup includes vaccines for polio, influenza, diphtheria, tetanus, pertussis, rabies, tuberculosis and cholera. A vaccine against tick-borne encephalitis is the biggest seller. Chiron began selling Chiron Behring's rabies vaccine in the U.S. in 1997.
The transaction, both in 1996 and now, makes a lot of sense for both companies, which have recently divested themselves of subsidiaries that didn't fit into their core businesses. In 1996, the head of business development and technology for Behringwerke told BioWorld Today the company wanted out of the vaccine business, which spurred the deal with Chiron. Vaccines accounted for only 15 percent of Behringwerke's revenues.
For its part, Chiron has undergone internal changes, such as tightening its core business, as well as bringing on a new CEO, Sean Lance, who takes the helm May 1. Lance is a former chief operating officer of London-based Glaxo Wellcome plc. (See BioWorld Today, March 24, 1998, p.1.)
As part of its restructuring, Chiron sold its device-oriented ophthalmic unit for $300 million in cash to Bausch & Lomb, of Rochester, N.Y., in October 1997 and consolidated a vaccine manufacturing efforts by shutting down its St. Louis facility in March. (See BioWorld Today March 9, 1998, p 1, and Oct. 23, 1997, p.1.)
Chiron currently is seeking a partner for its diagnostic business, Knighton added.
"We've had a redirection of Chiron," Knighton conceded, "but it is not only dealing away assets that aren't part of our core business, it is also taking actions, like this [vaccine company acquisition], that bolster our core businesses."
Knighton was not aware of any management or other changes that will take place at Chiron Behring as a result of the completed purchase. Magnus Lundberg, president of Chiron Vaccines and Chiron Therapeutics oversees the company.
"But, I feel I should mention that we have a new CEO coming on board," said Knighton, referring to Lance. "I'm sure he will take a look at the structure — the business —and determine any short- or long-term direction for the company." *