UPDATED: GSK puts Human Genome Sciences in play with $2.59B buyout offer

After more than two years of rumors and speculation, GlaxoSmithKline ($GSK) has finally stepped up to the plate with an offer to buy out its partner Human Genome Sciences ($HGSI) for $2.59 billion, or $13 a share. And in moments speculators bid up HGS's battered share value by 110%, to more than $15, as HGS quickly rejected the offer. 

In rejecting the offer, though, HGS also said it was teaming up with Goldman, Sachs and Credit Suisse to explore a sale. In other words, they're looking for new offers to drive up the buyout price, putting the company in play.

GSK's $13 offer would have triggered laughter after the biotech company won approval for Benlysta, a breakthrough drug for lupus. GSK acquired the European license for the drug and seemed the most likely suitor for the developer. But at yesterday's close HGS's disappointing marketing record had beaten down the stock value to $7.17.

But GSK is interested in more than just Benlysta. It's also partnered with the company on the late-stage heart drug darapladib--tapped as a possible blockbuster--as well as the experimental diabetes treatment albiglutide. And now it wants more information on both as it pushes for a buyout.  

"Having worked together with Human Genome Sciences for nearly 20 years, we believe there is clear strategic and financial logic to this combination for both companies and our respective shareholders – and that now is the appropriate time in the evolution of our relationship for our two companies to combine," said Glaxo CEO Andrew Witty. Witty went on to outline $200 million in prospective "synergies" following a buyout as HGS is merged into the bigger company.

A GSK/HGS combination has long been one of the most discussed possibilities in the industry. The initial speculation began when Benlysta began to look like a winner in Phase III. Just last August Piper Jaffray speculated that HGS could be had for $21 to $26 a share. But the biotech's high-flying expectations to turn an approval into blockbuster sales quickly ran into trouble, and soon the persistent discussion of a buyout failed to spark even a brief revival in the share price. 

GSK chose an opportune moment to strike.

- get the release from HGS
- here's the release from Glaxo
- here's the story from Reuters