British drugs giant GSK could announce a deal for HGS today

British drugmaker GlaxoSmithKline Plc (LON:GSK) is seen to increase to some USD14.00 (EUR11.43) a share, or around USD2.8bn in total, from USD13.00 per share, its bid to buy US biopharmaceutical firm Human Genome Sciences (NASDAQ:HGSI), or HGS, and could announce an agreement on Monday, according to Reuters sources.

The parties are currently negotiating the final details of a transaction, the informed people told the news agency.

The move comes as Human Genome investors have been pressing for talks with hostile bidder GSK after no alternative offers came in during an auction process carried out as part of the company’s strategic review, the report said.

The British group took its offer to HGS shareholders in May after the target’s board turned it down earlier in April. It set 20 July as the deadline for its bid allowing it to run beyond the 16 July deadline set by HGS for final offers to be submitted as part of its strategic review. GSK, which declined to participate in that process, said the extension to its bid would enable HGS shareholders to compare the results of the board’s review to the hostile offer.

The transaction offers immediate premium liquidity to HSG’ investors, while sparing them the inevitable high risk involved in HSG pursuing its future growth objectives, the buyer explained.
It is also in line with GSK’s long-term growth strategy and would help it simplify its business model.

GSK has repeatedly said it was willing to meet with HGS and review its takeover proposal at any time, but the talks during the weekend have been initiated by Human Genome, according to one of the sources cited by Reuters.

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GSK requests board to drop poison pill, blocking takeover of HGS

British drugmaker GlaxoSmithKline Plc (LON:GSK) said it had added as a condition to its USD13.00 (EUR10.35) a share hostile takeover offer for Human Genome Sciences (NASDAQ:HGSI) the request that the board of the US biopharmaceutical firm abandoned the poison pill adopted to block a takeover.

HGS announced on 17 May a poison pill with a 15% trigger and one-year term, to allow the company to fully focus on its strategic review process and to protect shareholders against unsolicited takeover attempts.

GSK decided to take its offer directly to shareholders after HGS’ board turned it down last month as too low.

The British group announced on May 9 it would not take part in HGS’s review of strategic alternatives as invited and would instead launch its tender offer to allow HGS shareholders the chance to appreciate the merits of the offer themselves.

The offer was kicked off on May 10 and will run until June 7, valuing the target at some USD2.6bn.

According to HGS’ board the bid fails to reflect the value inherent to the company’s assets, operations and growth opportunities, including the upside potential represented by its pipeline.

The board advised shareholders not to tender their shares to the bid which it had deemed inadequate and undervaluing the company.

GSK has said it expected the takeover to serve its growth plans which include simplifying the business model, boosting R&D returns and deploying capital in a disciplined manner.

The British buyer is advised by Lazard Ltd (NYSE:LAZ), Morgan Stanley (NYSE:MS), Cleary Gottlieb Steen & Hamilton LLP and Wachtell, Lipton, Rosen & Katz.

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HGS’ board urges shareholders not to accept “inadequate” offer from GSK

The board of US biopharmaceutical firm Human Genome Sciences (NASDAQ:HGSI), or HGS, said on Thursday it had determined that the USD13.00 (EUR10.23) a share hostile takeover offer from British drugmaker GlaxoSmithKline Plc (LON:GSK) was inadequate and undervalues the company and advised shareholders not to tender their shares to it.

GSK decided to take its offer directly to shareholders after HGS’ board turned it down last month as too low.

The British group announced on 9 May it would not take part in HGS’s review of strategic alternatives as invited and would instead launch its tender offer to allow HGS shareholders the chance to appreciate the merits of the offer themselves.

The offer was kicked off on 10 May and will run until June 7, valuing the target at some USD2.6bn.

According to HGS’ board the bid fails to reflect the value inherent to the company’s assets, operations and growth opportunities, including the upside potential represented by its pipeline.

GSK’s offer was made when HGS shares were trading near a 52-week low, taking advantage of the price dislocation to opportunistically capture for itself the significant upside potential of upcoming value-driving products, the board said further.

As there was no decision by HGS’ board to sell the company, the takeover offer should be evaluated against the firm’s long-term strategy for shareholder value creation and the prospect of other potential deals which could bring more value, the board added.

HGS also announced today a poison pill with a 15% trigger and one-year term, to allow the company to fully focus on its strategic review process and to protect shareholders against unsolicited takeover attempts.

GSK has said it expected the deal to serve its growth plans which include simplifying the business model, boosting R&D returns and deploying capital in a disciplined manner.

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GSK goes hostile

HGS rejects GSK offer