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GSK to initiate hostile takeover bid for Human Genome Sciences

Wednesday, May 09 2012 | Comments
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GlaxoSmithKline Plc (GSK) plans to initiate a tender offer to acquire all outstanding shares of Human Genome Sciences Inc. (HGS) for $13 per share in cash.

The offer values the Rockville, Md.-based company at nearly $2.6 billion, The Associated Press reported.

HGS rejected a private offer last month made by GSK for the same price, stating that its board of directors had determined that the offer did not "reflect the value inherent in HGS."

At the time, the board authorized the exploration of strategic alternatives, including but not limited to a sale of the company, and invited GSK to participate in the process. HGS also requested additional information about investigational products in GSK's clinical pipeline to which HGS has substantial financial rights, including darapladib, which is in Phase III development as a treatment for cardiovascular disease, and albiglutide, another late-stage candidate that is being developed for patients with type 2 diabetes.

In addition to darapladib and albiglutide, the two firms are also collaborating on the development and commercialization of Benlysta (belimumab), which was approved in March 2011 by the Food and Drug Administration as the first new treatment for lupus in more than 50 years.

With the announcement of its planned tender offer to shareholders, GSK said it remains willing to meet and review its offer with HGS at any time, but added that it will not participate in the strategic alternatives review process.

The British drugmaker asserted that its offer "takes into account the value of Benlysta, albiglutide, darapladib and other assets, as well as the synergies in a business combination."

GSK further noted that it has consistently provided both HGS and the financial markets with all material data related to the progress of these three drugs. In addition, the firm said, "In respect of HGS' desire to assure itself that GSK is not in possession of other material information regarding albiglutide or darapladib, GSK has provided HGS with the limited additional clinical information available to GSK that can be shared consistent with regulatory and legal constraints."

The offer will remain open for 20 business days following its commencement.

HGS said its board of directors will review and consider the offer and will advise stockholders of its recommendation regarding the offer within 10 business days after GSK initiates it. The company urged its stockholders to take no action pending the board's review and noted that its exploration of strategic alternatives is still under way.

Shares of HGS closed at $14.59, down $0.03, or 0.2 percent, in moderate volume on the Nasdaq.

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