GSK to go hostile with $2.6 billion Human Genome tender

Wed May 9, 2012 7:06am EDT
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By Ben Hirschler

LONDON (Reuters) - GlaxoSmithKline will take its $2.6 billion bid for Human Genome Sciences direct to shareholders this week, after its takeover offer was rejected last month by the U.S. biotech group's board.

The decision to go hostile with the $13 a share cash tender offer sets GSK up for a battle with those Human Genome investors who believe it is not offering enough.

"They will do fantastically well out of this - at $13 it is a steal," said Mark Evans, a fund manager at Taube Hodson Stonex, the sixth largest investor in Human Genome with a 5.6 percent stake.

"I still think it is very likely that they will have to pay more."

Human Genome's board spurned the approach from Britain's biggest drugmaker last month, saying it did not reflect the company's inherent value. GSK insists its bid, representing an 81 percent premium, is full and fair.

Human Genome shares closed at $14.62 on Tuesday - above GSK's offer price but still only half the peak touched in April last year, when investors' hopes were higher for its new drug for the autoimmune condition lupus, Benlysta.

GSK and the U.S. pioneer of gene-based drug discovery sell Benlysta together and the companies are collaborating on two other experimental drugs for diabetes and heart disease that could become significant sellers.

Buying Human Genome would give GSK full rights to these partnered drugs.   Continued...

Signage is pictured on the company headquarters of GlaxoSmithKline in west London. REUTERS/Toby Melville