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