GlaxoSmithKline pounces on Human Genome with $2.6 billion bid
By Ben Hirschler
LONDON (Reuters) - Human Genome Sciences has rejected an unsolicited bid worth around $2.6 billion from long-time partner GlaxoSmithKline, marking a new takeover battle in a drugs sector swept by M&A activity recently.
The pioneer of gene-based drug discovery, which sells a new drug for lupus with GSK, said on Thursday the offer of $13 per share, made in a letter on April 11, did not reflect the value inherent in the company.
It has hired Goldman Sachs and Credit Suisse to help explore strategic alternatives, including a possible sale. GSK has been invited to participate in that process.
The Rockville, Maryland-based firm was formed 20 years ago with the mission to isolate genes and identify their function in order to develop new drugs. Over the years it has had a rollercoaster ride as hopes for its drugs have waxed and waned.
GSK's offer represents an 81 percent premium to its closing stock price on Wednesday of $7.17. However, that it is still well below the $30 touched a year ago and investors are hoping for more, with the shares doubling to $14.40 by 11 a.m. EDT (1500 GMT).
Britain's biggest drugmaker said the rebuff was disappointing as its offer would give investors "immediate and certain value" superior to what Human Genome could achieve as a standalone company.
GSK chief executive Andrew Witty wrote to Human Genome boss Tom Watkins on April 11 setting out the proposal, saying he was prepared to commence a cash tender offer with no financing or due diligence condition.
Buying Human Genome would give GSK full rights to partnered drugs, which include not only Benlysta for lupus but also promising experimental drugs for heart disease and diabetes. Continued...