Bay Area biotechnology giant Chiron Corp. agreed Monday to hand over its reigns to Switzerland-based drug company Novartis AG for an all-cash offer of $5.1 billion.

Novartis wants to take control of Emeryville-based Chiron to get a hand in the vaccine market that has grabbed the spotlight because of worldwide concern over a potential bird-flu pandemic. The vaccines market may reach $10.4 billion by 2007, analysts with Lehman Brothers predict.

"Chiron's non-Novartis directors have unanimously determined that this transaction with Novartis is in the best interests of Chiron's shareholders," Howard Pien, chief executive officer of Chiron, said in a statement.

Novartis had made an original bid of $4.5 billion, or $40 a share, on Sept. 1, but Chiron's board ruled it "inadequate." The new offer is $45 a share.

Both companies say it's premature to speculate on what would happen to Chiron's Emeryville headquarters or its 2,000 employees there if the merger goes through. But analysts say they'd be surprised if Novartis doesn't keep a major presence there.

"The way people need to look at this is that half the pharmaceutical business happens in the United States, so obviously they're going to keep their business in the United States," said John McCamant, editor of the Medical Technology Stock Letter in Berkeley. "When this is done, you can expect it to be Novartis Emeryville USA here."

Shares of Chiron rose 74 cents Monday on the news and closed at $44.14. The company's market cap is $8.29 billion.

Besides entering the vaccine market, Novartis targeted this deal because italready has invested heavily in Chiron. Novartis currently owns 42 percent of the biotech firm and three of Chiron's 10 board members are Novartis officials.

"Certainly, given all of Chiron's woes over the last 18 months, it makes good sense for Novartis to protect one of its largest investments," said Jennifer Chao, a Deutsche Bank analyst.

The deal will give Novartis the remaining 58 percent of the shares, or about 113 million Chiron shares, for about $5.1 billion.

Novartis is the second-largest drug company in Europe and has introduced more new products, 13, in the U.S. since 2000 than any other large pharmaceutical company.

Founded in 1981, Chiron is the third-oldest biotechonology company after industry leaders Amgen Inc. and Genentech Inc.

However, the company's reputation has been tested the last couple of years.

During the 2004-2005 flu season, Chiron was unable to contribute vaccine to the national supply -- it had been expected to provide about 48 million doses, or half of the U.S. amount -- after bacterial infections forced Chiron to close its manufacturing plant in England.

So far this season, the company has only been able to contribute about 1.5 million doses of its flu vaccine to the national stockpile, well below the 18 million to 26 million doses it had planned to produce.

On the positive side, just last week Chiron announced that an immune booster it is testing may make it possible to shrink the size of bird-flu shots, which would allow an avian influenza vaccine to be produced and distributed in lower dosages and greater overall numbers.

Besides vaccines, Chiron produces popular kits to test blood donations for viruses and it makes drugs for cystic fibrosis, multiple sclerosis and kidney cancer.

The all-cash offer could be completed in the first half of next year, if the deal can gain approval from a majority of Chiron's shareholders as well as U.S. and European regulators.

Until then, Chiron is trying to keep the working environment there as close to "business as usual" as possible, Chiron spokesman David Weiskopf said.

"This whole process of closing the deal could be a few months or double that time," Weiskopf said. "Assuming the deal closes, and Novartis takes control of Chiron's assets, I'm sure they will communicate whether they will make changes here or not change anything at all."

Still, some Chiron employees say they are struggling to remain calm during the time of uncertainty.

"We're all wondering if we'll have a job," said Melodi Dice, who's worked at Chiron for eight years in its legal department. "We're not sure what their plans are. That part is kind of scary ... you just have to keep going."

Emeryville officials aren't strangers to seeing major companies leave their city.

In 2000, software company Sybase relocated from Emeryville to Dublin, and last year Ask Jeeves moved to Oakland.

"When there's a change like this, you're always concerned, because you don't know what the attitude of the new company will be," said Dick Kassis, mayor of Emeryville. "As mayor, I would say it's our hope that Novartis will be the same kind of good neighbor and corporate player to this community as Chiron has been."

Staff Writer Cecily Burt, the Associated Press and Bloomberg News Service contributed to this article.