NEW YORK (CNNMoney.com) - Shareholders of the troubled vaccine maker Chiron face a crucial vote in the next few days: Sell out to Novartis, or reject the drug maker's merger bid and continue to go it alone.

Novartis (up $0.81 to $55.99, Research), a Swiss company with 16 times the market cap of Chiron (up $0.01 to $45.76, Research), already owns 44 percent of the smaller company's shares and wants to buy the remaining piece for $5.1 billion, or $45 a share, its second offer since the bidding began. Chiron shareholders are scheduled to vote on the proposed merger April 12.

But ValueAct, a hedge fund and the third-largest holder of Chiron stock with 9.8 million shares, has said it won't support the merger.

So Novartis also faces a serious decision in the next days: raise its bid or risk getting its merger shot down by angry shareholders. With so much invested in Chiron, a lead vaccine manufacturer based in Emeryville, Calif., it would be hard to take the third choice: walk away from the deal.

Novartis stock could take a hit of about 5 percent if the deal falls though, said Bernstein analyst Gbola Amusa.

With Chiron, the stakes are higher, and the company has had serious problems that caused its stock value to plunge by one third towards the end of 2004. The Food and Drug Administration temporarily shut down its vaccine production factory in Liverpool, England in 2004 after the company found that a batch of flu shots was not sterile, contributing to a flu shot slowdown in the winter of 2005.

More recently, last March 16, Chiron recalled Morupar, its vaccine for measles, mumps and rubella, from Italy and the developing world.

Nonetheless, Chiron's stock has recovered from its 2004 plummet, lending weight to the shareholder argument that Novartis' offer is too low. ValueAct partner Mason Morfit has refused to meet with Chiron chief executive office Howard Pien to discuss the deal and recently sent him a letter saying, "We again respectfully decline the invitation to participate in what we perceive to be a sham road show undertaken for the wrong reasons in support of the wrong cause."

Morfit declined to comment further Thursday.

Novartis originally offered $40 a share, or $4.5 billion, but raised the bid after Chiron's price went up. Some analysts believe that Novartis should raise its bid again before the shareholder vote, to increase its chances of securing the merger.

"I agree with [Chiron shareholders] that the deal is not high enough," said Shiv Kapoor, analyst for Montgomery & Co. "I'm pretty sure that things are going to fall apart [if Novartis doesn't raise its bid.] I don't think shareholders are going to agree to this value."

Amusa, the Bernstein analyst, said Novartis could easily raise its bid to $50 a share, and might be able to push it to $53 without straining the company.

"Certainly we think that Novartis could go higher," said Amusa. "Not being able to execute on this deal might be taken negatively by the market. Novartis already owns 44 percent of Chiron so raising the bid doesn't impact them in a negative way. They could walk away but we think it's more important for them to finish it than to walk away."

Kapoor of Montgomery said that if Chiron shareholders shoot down the deal, that could drive up Chiron stock, in anticipation of Novartis raising its bid for a third offer.

But with all its problems, is Chiron worth buying at a higher price? Analysts have an easy answer for this question: they just point to the stock price, which has traded higher than Novartis' offer for the last month, so Chiron could be in a stronger position to argue for a higher bid.

Looking forward, Thomson consensus projects 38 percent earnings per share growth in 2006. Amusa said Chiron's stock recovery demonstrates that its vaccine production problems are behind it, and its vaccine and blood-screening business will help it grow.

Chiron was not immediately available for comment. Novartis spokesman John Gilardi would not say whether his company planned to adjust its offer ahead of the April 12 vote.

"We remain committed to completing the transaction agreement under terms of the existing merger, which was unanimously approved by the Chiron board of directors," said Gilardi. "We feel that our offer is full and fair and having Chiron as part of Novartis is a better alternative than having Chiron remain as a stand-alone company."

The analysts interviewed for this story do not own shares of Novartis or Chiron, and their firms do not conduct business with them.

To read more about Chiron and the flu vaccine shortfall, click here.

To read about Novartis' recent licensing deal, click here.