The gloves are off. GlaxoSmithKline ($GSK) has mounted a hostile offer for its long-time partner Human Genome Sciences ($HGSI), whose board shot down GSK buyout bid last month but invited the London-based drug giant to a sales process that could involve other potential bidders.
GSK says it wants no part in the sales process. Rather, the company plans to go directly to Rockville, MD-based HGS shareholders with a tender offer of $13 per share, the same amount that HGS board snubbed in April. Even though the offer amount is an 81% premium on the closing price at the time bid became publicly known, HGS honchos say that it undervalues the real worth of their biotech group, and critics say GSK offer is opportunistic and HGS shares were trading at around $30 per share about a year ago.
The recent market for biotech buyouts places huge premiums on the companies, and Reuters reported last month that a coterie of powerful shareholders in biotech have pushed boards to hold out for larger offers from pharma buyers. Yet GSK holds a lot of cards in its game with HGS leadership, already controlling half of the biotech's lupus drug Benlysta and substantial stakes in HGS experimental diabetes drug albiglutide and darapladib for heart disease. GSK would gain full control of these assets in a HGS buyout, but other buyers of HGS would have to share them with the British drugmaker.
"I still think it is very likely that they will have to pay more," Mark Evans, a Taube Hodson Stonex fund manager, whose firm holds a major stake in HGS, told Reuters. He called the $13-per-share offer a "steal."
GSK now appears to be telling HGS and its advisers at Goldman and Credit Suisse to put up or shut up. The drug giant says the 20 business days that its tender offer remains open should give HGS and its bankers enough time to fetch other offers. At the same time, GSK says that its ready and willing to go to the table and hammer out an amicable acquisition with HGS leaders at any time.
- here's GSK release
- see Reuters' article
- and Bloomberg's report
GSK and HGS posture over price and value in M&A standoff
Spurned GSK chief: We're the 'compelling owner' for HGS
HGS snubs $2.6B buyout offer from Benlysta partner GSK