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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): September 17, 1998
Chiron Corporation
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(Exact name of registrant as specified in its charter)
Delaware 0-12798 94-2754624
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
4560 Horton Street, Emeryville, CA 94608
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (510) 655-8730
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N/A
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
On September 17, 1998, Chiron Corporation and the Bayer Group issued a
press release, the text of which is attached hereto as Exhibit 99.1, announcing
that Chiron Corporation and Bayer Corporation, an Indiana corporation, have
signed an agreement under which Bayer Corporation has agreed to purchase
Chiron's wholly-owned, IN VITRO diagnostics subsidiary, Chiron Diagnostics
Corporation ("Chiron Diagnostics"), for approximately $1.1 billion. Chiron
Corporation and Chiron Diagnostics issued a separate press release on September
17, 1998 making such announcement, the text of which is attached hereto as
Exhibit 99.2.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
EXHIBIT NUMBER
99.1 Joint Press Release by Chiron Corporation and the Bayer
Group dated September 17, 1998 referred to in Item 5 above.
99.2 Press Release by Chiron Corporation and Chiron Diagnostics
Corporation dated September 17, 1998 referred to in Item 5
above.
2
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CHIRON CORPORATION
Date: September 21, 1998 By: /s/ William G. Green
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William G. Green
Senior Vice President,
General Counsel and
Secretary
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FOR IMMEDIATE RELEASE
CONTACTS: James L. Knighton Mark Ryan
Chiron Corporation Bayer Diagnostics
510.923.6055 412.777.5666
BAYER TO PURCHASE CHIRON'S IN VITRO DIAGNOSTIC BUSINESS FOR
OVER $1.1 BILLION PLUS LICENSING FEE AND ROYALTIES
EMERYVILLE, CA AND PITTSBURGH, PA, SEPTEMBER 17, 1998 - Bayer Group and Chiron
Corporation (NASDAQ: CHIR) announced today that the two companies have signed a
definitive agreement providing for the purchase by Bayer of Chiron's IN VITRO
diagnostic business. The acquisition is pending the approval of the relevant
authorities and is expected to be completed before the end of the year.
Under the terms of the agreement, Bayer will pay Chiron approximately $1.1
billion to acquire Chiron Diagnostics Corporation, headquartered in Walpole, MA,
which operates the immunodiagnostic, critical care, nucleic acid diagnostics
(NAD), and chemistry businesses. Chiron will retain its patent position and
certain licensing rights for hepatitis C (HCV) and HIV in probe assays. Chiron
will also maintain its ownership position in the blood testing market segment.
Through its joint immunodiagnostic business with Ortho Clinical Diagnostics and
through its recently formed alliance with Gen-Probe Incorporated, Chiron will
expand its business in this high growth arena through its unique intellectual
property position in hepatitis and HIV.
"There are three important aspects to this acquisition," said Rolf Classon,
president of Bayer's Diagnostics Business Group. "First, it opens up a
completely new area in blood gas analysis for Bayer; secondly, it will bring a
significant increase in our existing and future clinical laboratory systems
business; and thirdly it gives us technology which will be very important in the
future, especially in the NAD field. We are also acquiring a global customer
base, know-how and additional research capacity."
"This is a very important step in the evolution of Chiron," said Sean Lance,
Chiron's president and chief executive officer. "While our diagnostics business
has been a significant revenue source, the value that we've added to that
business will now provide new resources and expanded opportunities for
accelerating our efforts in the therapeutics and vaccines businesses. In
addition, we are confident that the employees who have built this business will
continue to help Bayer, a world leader in diagnostics, leverage Chiron's
technologies to create advanced medical diagnostic products."
-MORE-
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CHIRON SELLS DIAGNOSTICS BUSINESS TO BAYER
PAGE TWO
Bayer's Business Group Diagnostics, headquartered in Tarrytown, New York, is one
of the largest diagnostics businesses in the world. The company serves
customers in 100 countries with an offering that includes diagnostics systems in
three key segments: Laboratory Testing, Point of Care Testing and Self Testing.
The Group has approximately 4,800 employees worldwide with 1997 sales of $1.1
billion. Bayer Diagnostics is a member of the worldwide Bayer Group, a $32
billion chemical and pharmaceutical company based in Leverkusen, Germany.
Chiron Corporation, headquartered in Emeryville, California, is a leading
biotechnology company that participates in three global healthcare markets:
blood testing, therapeutics and vaccines. In support of these businesses,
Chiron also conducts research and development in the fields of biological
proteins, gene therapy and combinatorial chemistry.
THIS NEWS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES WHICH MIGHT AFFECT THE INITIATION AND COMPLETION OF THIS
TRANSACTION, OF CLINICAL TRIALS AND THE LAUNCH OF PRODUCTS. A FULL DISCUSSION
OF THE COMPANIES' OPERATIONS AND FINANCIAL CONDITION, INCLUDING FACTORS THAT MAY
AFFECT THEIR BUSINESSES AND FUTURE PROSPECTS, IS CONTAINED IN DOCUMENTS THE
COMPANIES FILE WITH THE SEC, SUCH AS FORM 10-Q AND 10-K AND 40F REPORTS. THESE
DOCUMENTS IDENTIFY IMPORTANT FACTORS THAT COULD CAUSE THE COMPANIES' ACTUAL
PERFORMANCE TO DIFFER FROM CURRENT EXPECTATIONS, INCLUDING THE OUTCOME OF
CLINICAL TRIALS, REGULATORY REVIEW, MANUFACTURING CAPABILITIES AND MARKETING
EFFECTIVENESS.
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Note to Editors: Both companies have issued press releases detailing the impact
of this agreement on their respective operations and suggest that interested
parties review these announcements.
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FOR IMMEDIATE RELEASE
CONTACTS: James L. Knighton Judith Rossi
Chiron Corporation Chiron Diagnostics
510.923.6055 508.660.4875
CHIRON SELLS DIAGNOSTICS SUBSIDIARY TO BAYER FOR OVER $1.1 BILLION
IN CASH AND GRANTS LICENSES TO PATENTS
EMERYVILLE, CA, SEPTEMBER 17, 1998 - Chiron Corporation (NASDAQ: CHIR) and the
Bayer Group announced today that the two companies have signed a definitive
purchase agreement under which Chiron will sell its IN VITRO diagnostics
subsidiary, Chiron Diagnostics Corporation, to Bayer. Exiting the diagnostics
systems business will accelerate Chiron's refocusing on its key markets of
therapeutics, vaccines and blood testing. The transaction is expected to be
completed by the end of 1998.
The sale provides up front cash payments in excess of $1.1 billion. In
addition, Chiron will license certain intellectual property pertaining to
hepatitis C (HCV) and human immunodeficiency virus (HIV) for use in nucleic acid
diagnostics worldwide to Bayer in exchange for future royalties. Chiron also
retains the right to grant further licenses of this intellectual property to
others or to exploit it itself, subject to certain limitations. Additionally,
Chiron retains its two blood testing businesses: its joint business Ortho
Clinical Diagnostics, and Chiron's new collaboration with Gen-Probe Inc., to
develop nucleic acid products for blood testing.
"This agreement reveals clearly the value Chiron has created in the area of
diagnostics," said Sean Lance, Chiron's president and chief executive officer.
"When you add the value of the agreement with Bayer, the potential for further
licensing and profit streams from additional third parties, and couple that with
the value being created by our existing and expanding opportunities in blood
testing, the total estimated value to Chiron, from the diagnostic area alone, is
well in excess of $2 billion."
Lance further added, "This highlights the value of Chiron's innovation
capability and its existing intellectual property assets. We are a technology
rich company and companies like Bayer have recognized the power and value of
that technological foundation. This agreement demonstrates some of the diverse
ways we will enrich corporate value using our technology."
-MORE-
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CHIRON SELLS DIAGNOSTICS BUSINESS TO BAYER
PAGE TWO
Chiron Diagnostics, a business unit of Chiron Corporation, is headquartered in
Walpole, Massachusetts and is an international leader in IN VITRO diagnostics
focusing on critical blood analysis, clinical chemistry, endocrinology,
infectious disease, allergy, and oncology. The company has operations in 20
countries, sells its products in more than 90 countries, and employs
approximately 3,000 people.
"Over the past months, we investigated a number of strategic options for our
diagnostics businesses," said Richard Barker, president of Chiron Diagnostics.
"The Bayer/Chiron combination was the most strategically sound, given the
breadth and depth Bayer brings to the market place. In particular, Bayer will
offer our customers the best integrated solution for the central lab, the
strongest technology portfolio in the fastest growing diagnostic segment,
probes; and the strongest platform for growth in point of care testing."
BLOOD TESTING OPPORTUNITY
This transaction also provides Chiron an opportunity to further articulate its
strategic direction in the blood testing market. There is a significant need to
provide for an increasingly safe supply of blood products on a worldwide basis.
It is estimated that 50 to 70 million blood donations are made annually, each of
which must be screened to help protect the population from significant
blood-borne diseases. Chiron, together with Ortho Clinical Diagnostics, a
Johnson & Johnson company, is a leading participant in testing blood for the
potential presence of infectious agents through the use of immunoassay tests for
hepatitis B, C and HIV. Through its recently formed alliance with Gen-Probe
Inc. in probe testing, Chiron will significantly expand its business by
providing blood banks with the capability to directly test for infectious agents
through the use of nucleic acid diagnostic probe technology thereby creating an
additional level of safety to the blood supply. Chiron's blood testing business
is consistent with the corporate goal of preventing and treating disease through
the application of leading-edge technologies to major areas of medical need.
-MORE-
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CHIRON SELLS DIAGNOSTICS TO BAYER
PAGE THREE
REDEFINING CHIRON
Over the past two years Chiron, one of the pioneer companies in biotechnology,
has embarked on a number of initiatives to realize value in its non-core
businesses and to improve long-term performance. These include the divestiture
of specific business segments (Chiron Vision to Bausch & Lomb for $300 million,
controls business to BioRad, and its electrophoresis business to Helena Labs),
cost improvement programs, the rationalization of manufacturing capacity (the
sale of Puerto Rico and St. Louis facilities) and a program to focus R&D
activities. Most recently, management has increased the intensity and urgency
of the initiatives and has begun establishing a significantly modified strategic
direction for the company.
"The initiatives put in place by the company are right," said Lance, "but we
need to take them further, both in a sense of urgency and achievement. Our
immediate actions are to 1) increase the goals of our operational efficiency
program, 2) continue our R&D prioritization process, 3) finalize our new
strategic plans, and 4) be prepared to use the assets obtained by our
Diagnostics agreement to implement that plan by resourcing internal development
and technology, product, and/or company acquisitions."
Chiron Corporation, headquartered in Emeryville, California, is a leading
biotechnology company that participates in three global healthcare markets:
therapeutics, vaccines, and blood testing. In support of these businesses,
Chiron conducts research and development in the fields of biological proteins,
gene therapy and combinatorial chemistry.
THIS NEWS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES WHICH MIGHT AFFECT THE INITIATION AND COMPLETION OF THIS
TRANSACTION, OF CLINICAL TRIALS AND THE LAUNCH OF PRODUCTS. A FULL DISCUSSION
OF CHIRON'S OPERATIONS AND FINANCIAL CONDITION, INCLUDING FACTORS THAT MAY
AFFECT ITS BUSINESSES AND FUTURE PROSPECTS, IS CONTAINED IN DOCUMENTS THE
COMPANY FILES WITH THE SEC, SUCH AS FORM 10-Q AND 10-K AND 40F REPORTS. THESE
DOCUMENTS IDENTIFY IMPORTANT FACTORS THAT COULD CAUSE CHIRON'S ACTUAL
PERFORMANCE TO DIFFER FROM CURRENT EXPECTATIONS, INCLUDING THE OUTCOME OF
CLINICAL TRIALS, REGULATORY REVIEW, MANUFACTURING CAPABILITIES AND MARKETING
EFFECTIVENESS.
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