Interesting what a little thing like a half-billion dollars can do. It was enough to make the board of directors of flu vaccine maker Chiron (NASDAQ:CHIR) jump to accept the $5.1 billion takeover offer from its largest shareholder, Novartis (NYSE:NVS), after it had rejected one that was $4.5 billion as "inadequate." The Swiss pharmaceutical company offered to acquire Chiron in a $45-per-share cash deal that would give it all of the remaining outstanding shares it doesn't already own.

Novartis has long held a stake in Chiron, stemming from an initial 47% stake purchased through predecessor company Ciba-Geigy in 1994. Novartis was created through the merger of Ciba-Geigy and Sandoz in 1996, which brought forward the Chiron stake. It had pared back its holdings over the years, so that it now owns 42% of Chiron's shares.

Certainly it would seem that Chiron is worth every penny of the offer, despite the well-publicized missteps in its flu vaccine production. Its cancer therapeutics products would be a natural fit with Novartis' own products, and it has several divisions that represent more business than the vaccine line, including blood testing and biopharmaceuticals. Analysts have pegged Chiron's diagnostic segment as being worth $5 billion by itself.

There was apparently a bit of gamesmanship going on in the buyout negotiations. First, it was revealed that it was Chiron that had approached Novartis about acquiring its outstanding shares, and Novartis came back with its $40-per-share offer, which the board rejected. Novartis CEO Dan Vasella then let it be known who was willing to walk away from the deal should the independent directors think about getting greedy. And certainly the continued miscues in Chiron's ability to deliver enough doses of flu vaccine had to weigh in the decision. Any more fumbles and the company's value might begin to wane.

Undoubtedly, though, there were just too many synergies and cost savings to be realized from doing the deal for Novartis to not raise its bid. It estimates it will save $200 million in costs over the next three years, with half coming in the first 18 months after the deal closes. And if it hoped to keep pace with competitor GlaxoSmithKline (NYSE:GSK), a Motley Fool Income Investor recommendation, it needed to get the deal done. Glaxo is moving strongly into the vaccine market, producing 8 million doses of flu virus vaccine this year on its own and acquiring rival vaccine maker ID Biomedical (NASDAQ:IDBE).

The deal marks Novartis' third acquisition in 2005. It became the world's largest generic drug maker through its acquisitions of Hexel and Eon Labs, and it would now become the second-largest flu vaccine manufacturer behind Sanofi-Aventis (NYSE:SFY). Chiron's board seemingly has done right to inoculate itself against criticism by accepting the deal.

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Fool contributor Rich Duprey does not own any of the stocks mentioned in this article. The Motley Fool has a disclosure policy.