Print“In the end, however, the sweetened pot of $400 million and the lack of any other legitimate buyers was enough for HGS to succumb to GSK’s courtship.”
GlaxoSmithKline will acquire Human Genome Sciences for $3.6 billion, finally bringing to an end a three-month hostile takeover battle between the two companies. GSK succeeded in large part due to its raised all-cash offer to $14.25 per share from the $13.00 per share offer it had made in April 2012. The new offer values Human Genome Sciences at $3 billion, net of cash and debt and represents a 99 percent premium over HGS’s closing price on April 17, the last day before it publically disclosed GSK’s initial offer. The deal will allow GSK to take full control of Benlysta, its jointly owned drug for the treatment of lupus, and help expand GSK’s portfolio to include experimental drugs for the treatment of diabetes and heart disease.
The agreement puts to rest a three month hostile back-and-forth between the long-term partners. GSK has made repeated attempts to acquire HGS since April of this year when it made a $2.6 billion buyout offer. The board of directors at HGS promptly rebuffed the offer believing it to be too low and even claimed to have other suitors such as Celgene. The hostilities even included GSK attempting to buy HGS stock directly from investors and a “poison pill” strategy employed by HGS that would liquidate all of its assets and make acquiring its stock nearly impossible.
In the end, however, the sweetened pot of $400 million and the lack of any other legitimate buyers (likely due to GSK already owning licensing rights to all of HGS’s drugs) was enough for HGS to succumb to GSK’s courtship.
General feeling around Wall Street is that Human Genome Sciences’ management and investors would have liked to see a higher price and HGS certainly tried to find that. But, as JMP Securities managing director Lisa Bayko said in an interview with The Washington Post, “it doesn’t look like there were other bidders at current [price] levels because the price they negotiated is not that far off from where they started.”
GSK says it expects to save as much as $200 million by 2015 as a result of “cost synergies” between the two companies, though it’s unclear whether some of the savings would include layoffs at HGS’s Maryland facilities.
July 19, 2012
http://www.burrillreport.com/article-human_genome_sciences_and_glaxosmithkline_end_hostilities.html
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