Glaxo Goes Direct To HGS Shareholders With Hostile Offer
May 09 2012 - 5:02AM
Dow Jones News
GlaxoSmithKline PLC (GSK) said Wednesday it's taking its hostile
$2.6 billion takeover offer for Human Genome Sciences Inc (HGSI)
direct to the U.S. biotech's shareholders, by launching a tender
offer at $13 a share this week.
HGS, a U.S. pioneer of gene-based drug discovery that sells a
new drug for lupus with Glaxo, has so far rejected the offer made
last month, pointing out that its shares traded at $30 a year ago.
The target company has started a strategic review which it hopes
will encourage rival bids.
But the likelihood of a rival offer is limited, given that three
of HGS's major drugs are joint ventures with the U.K.'s largest
drug maker.
Glaxo co-markets lupus drug Benlysta with HGS. The biotech also
has financial interests in other experimental drugs under
development at Glaxo, including darapladib for cardiovascular
disease and once-weekly diabetes drug albiglutide.
Glaxo Wednesday said it won't take part in HGS's strategic
review, as it believes it is HGS's only realistic partner.
"We are the compelling owner for this business [HGS] as we have
the rights to and control of the company's three main assets
including the only one so far launched, Benlysta," GSK Chief
Executive Andrew Witty told journalists last month, adding: "We
believe this is the right time to maximize value for both sets of
shareholders."
Glaxo will now formally launch its $13 per share tender offer
for HGS this week. The offer would remain open for 20 days.
It said in a statement it "believes that the four weeks that
have passed since the offer made on April 11th, together with the
additional 20 business days that GSK's tender offer must remain
open following its commencement, provides a reasonable amount of
time for HGS to complete its review of alternatives."
With 198.5 million shares in issue, Glaxo's offer price bid
would value HGS at around $2.6 billion. At 0822 GMT, Glaxo shares
were flat at 1406 pence, giving the company a market value of about
GBP71.8 billion.
-By Sten Stovall, Dow Jones Newswires; +44 207 842 9292;
sten.stovall@dowjones.com
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