Sunday, 27 May 2012 06:17
To avoid dilution, HGS buyers would need board’s blessing.
GlaxoSmithKline amended the conditions of its $2.6 billion tender offer for Human Genome Sciences to require the company's board to invalidate a shareholder rights plan it recently adopted to fend off GSK’s bid.
The new rights plan would create “substantial dilution” for anyone attempting to acquire Human Genome Sciences without the approval of its board of directors, HGS said in a regulatory filing describing it.
In response, GSK has now amended its offer to require that the poison pill be invalidated or otherwise made “inapplicable” to GSK's acquisition of HGS, the company said in May 23 statement.
GSK offered HGS $13 per share in cash, a premium of 81 percent to HGS’s closing share price of $7.17 on April 18, the last trading day before HGS publicly disclosed GSK’s private offer. But HGS rejected that offer, calling it “inadequate” and “not in the best interests of HGS and its stockholders.” HGS has characterized the bid as opportunistic since it was made at a time when the company was trading near its 52-week low.
The two companies have been partners since 2006, sharing development costs and profits from HGS’ lupus drug Benlysta, which was first approved in March 2011 by the U.S. Food and Drug Administration. They are also partnered on two late-stage drugs to treat diabetes and heart disease, albiglutide and darapladib.
Should Benlysta sales grow as strongly as HGS predicts, gaining complete control of the drug’s profits could bolster GSK’s bottom line. The deal would also generate cost savings of at least $200 million, GSK predicts. GSK’s latest offer, which expires at midnight June 7, will likely show just how important the deal is to both companies.
By MICHAEL FITZHUGH