Subject: Chiron's Merger With Cetus Corp. Is Due for Ruling 
Date: Published: 12/2/91 (64 lines)
Source:  Wall Street Journal.  Copyright Dow Jones & Co. Inc. 

    Chiron's Merger
    With Cetus Corp. 
    Is Due for Ruling
    ----
    By Marilyn Chase
    Staff Reporter of The Wall Street Journal

    EMERYVILLE, Calif.  -- A judge's decision clearing the way
 for a vote on the merger of Chiron Corp. and Cetus Corp. 
 could come as early as this week, Edward E. Penhoet, Chiron's
 vice chairman and chief executive officer, said.
    Merger of the two biotechnology companies in a stock swap
 valued at $660 million was announced last July and is
 currently scheduled to be put to a special shareholder vote
 Dec. 10.
    But one condition of the merger has been tied up in court:
 the sale of Cetus's gene-amplification technology, or PCR
 technology, to a unit of Roche Holding Ltd.  for $300 million
 has been challenged in court by Eastman Kodak Co. Eastman
 asked the Delaware Chancery Court to enjoin the sale,
 claiming it retains broad rights to PCR technology under a
 1986 contract with Cetus.  Cetus says it terminated that
 contract in 1989 when it licensed diagnostic rights to the
 technology to Hoffmann-La Roche of Nutley, N. J. 
    "We expect a ruling {this} week in this regard," Dr. 
 Penhoet said in an interview.  If an injunction is granted,
 holding up the PCR sale, the merger will be delayed.  But he
 said, "If everything goes forward on Dec. 10, and the sale of
 PCR to Roche takes place, then the merger will take place as
 soon as practicable.  We'd anticipate consummating the deal
 around Dec. 16 or 17."
    Dr. Penhoet confirmed that Chiron expects to record
 charges exceeding $350 million in the acquisition of Cetus,
 and thus probably won't return to full-year profitability
 until 1993.
    However, he said, "The fundamentals of our business are
 very much on track," especially Chiron's joint diagnostics
 business with the Ortho unit of Johnson & Johnson, and
 royalties from its collaborative business with Novo-Nordisk
 of Denmark.
    Before any merger-related charges, analysts currently
 expect Chiron to post 1991 profit between 70 cents and $1.10
 a share.  However the mean projection is for profit of $18.7
 million, or 97 cents a share, on revenue of roughly $96
 million.  In 1990, the company earned $6.8 million, or 40
 cents a share, on revenue of $78.5 million.
    Dr. Penhoet declined to comment specifically on the
 analysts' outlook.  "It's a theoretical exercise because even
 without the merger {charge} there would be expenses --
 printing costs, legal costs," -- related to the proposed
 buy-out of Cetus, he noted.
    He said Chiron research into an AIDS vaccine and
 bone-growth factor are both on track.  He added that the
 company is also engaged in preclinical studies of a vaccine
 against Hepatitis C "but we won't be ready to start clinical
 trials for about a year."

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