By Sten Stovall
LONDON--GlaxoSmithKline PLC (GSK) looks likely to extend its
unsolicited $2.6 billion tender offer for Human Genome Sciences
Inc. (HGSI) beyond June 7, despite a "poison pill" shareholder
rights plan the U.S. biotechnology company imposed to block the
deal.
Human Genome adopted the stockholder rights plan last month to
try to ward off the U.K.'s biggest drug maker in an increasingly
hostile takeover battle between the companies that together sell
new lupus drug Benlysta.
Glaxo has taken its $13-a-share offer directly to investors
after Human Genome's board said it was too low. The U.S. pioneer of
gene-based drug discovery has rejected the offer, made in April,
pointing out that its shares traded at double that level a year
earlier. The target company has since started a strategic review,
which it hopes will encourage rival bids.
The British predator last month said it wouldn't proceed with
its offer unless the target company dropped the "poison pill"
shareholder rights plan. It allows shareholders to buy additional
shares at a discount if one investor buys or launches a tender
offer for more than 15% of Human Genome's stock without the board's
approval, effectively blocking an unwanted bidder.
"There's a reasonable chance that the poison pill will
eventually make them walk away if they don't have enough
acceptances in place but the likelihood is that they'll extend it,
but not for long," said Navid Malik of Cenkos Securities. "I still
believe that in order to get this deal done, Glaxo is going to have
to raise the offer by a couple of dollars."
Glaxo began working with Human Genome Sciences nearly 20 years
ago. Human Genome Sciences was one of the first biotech companies
to emerge from the early 1990s push to map all of the genes in the
human body.
Along with Benlysta, the U.S. 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 Thursday declined to say when its decision on whether or
not it would extend its tender offer.
"The tender offer states we have until 9 am U.S., or 2 pm U.K.
time on the following business day after it expires to make a
public announcement of any planned extension," an official for the
company said without elaborating.
At 1438 GMT, shares in Human Genome were trading at $13.30, down
0.3% on the day. Glaxo was at GBP14.30, up 0.3% from Wednesday's
close.
Write to Sten Stovall at sten.stovall@dowjones.com