Shares of U.S. vaccine maker Chiron Corp. (CHIR) rose nearly 2 percent on Tuesday as investors bet that Swiss drugmaker Novartis AG would raise its offer to pay $40 per share in cash for the 58 percent of Chiron it does not already own.

Chiron's independent directors on Monday dismissed the offer, launched by Novartis last week, as "inadequate," and Chiron's shareholders voiced agreement on Tuesday by bidding the company's stock up 1.7 percent to $43.51.

Wall Street analysts said Novartis' offer could serve as a floor for a higher bid, though many agreed it was a fair price and did not expect Novartis, an historically conservative acquirer, to pay a huge premium.

Novartis is already Chiron's largest stakeholder, the analysts said, and few other companies seem interested in buying Chiron as a whole.

A.G. Edwards pegged $46 per share as a fair high-bid level, and Prudential said it was possible Novartis would sweeten its $4.5 billion offer by another $1 billion.

Novartis, if its foray is successful, would gain exposure to Chiron's lucrative influenza vaccine business at a time when the drug industry is focused on outbreaks of the strain of bird flu that poses danger to humans.

Chiron had been one of the largest flu vaccine suppliers in the United States, but the contamination of some of its production sites in Europe prompted the Food and Drug Administration (search) to halt its vaccine production last year.

The company barely broke even in the second quarter of this year, but it said it could start supplying vaccines again by the 2005-2006 flu season.

Chiron's three business units, which focus on blood testing, vaccines and biopharmaceuticals, could also be broken up and sold off separately, analysts said, or Novartis might decide to sell its 42 percent share of the company.

If Chiron were sold in pieces, A.G. Edwards said Johnson & Johnson (JNJ) and GenProbe might want the profitable blood testing business while GlaxoSmithKline and Novartis could vie for the vaccine unit or its U.S. flu business. Chiron's biopharmaceutical arm, which doesn't perform as well as the other two businesses, could be broken up by product.