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GSK launches hostile $2.59bn bid for Human Genome Sciences

Will target shareholders following board’s decision to reject private approach

GSK - logo on building

GlaxoSmithKline (GSK) has launched a hostile takeover bid for Human Genome Sciences (HGS) worth $2.59bn after the US biopharma turned down its earlier private offer.

The tender offer, which would see GSK acquire all outstanding shares of HGS for $13,00 per share, is the same as the UK-based pharma firm's previous bid, which HGS' board rejected, saying it did not reflect the "the value inherent in the company".

GSK is aiming to go around HGS' board of directors by taking its offer directly to the biopharma company's shareholders.

Making the case for its new offer GSK said: “There is clear strategic and financial logic to this combination and HGS shareholders should have the opportunity to decide for themselves on the merits of the offer.”

According to GSK, the offer represents a premium of 81 per cent to HGS' closing price of $7.17 per share on April 18, 2012, the last trading day before HGS publicly disclosed GSK's private offer.

The pharma company also rejected HGS' suggest of a 'strategic alternatives review process', saying this was unnecessary and that it was important for HGS shareholders to understand GSK was committed to the purchase.

The new bid follows a commitment from GSK's CEO Sir Andrew Witty, made to his own company's shareholders, describing the intended purchase as “entirely consistent with our strategy to deliver sustainable growth, enhance R&D returns, simplify our business model and improve returns to shareholders”.

The two companies have a long-term partnership, which includes the recently launched lupus erythematosus treatment Benlysta (belimumab), as well as investigational heart drug darapladib and diabetes treatment albiglutide.

Profits from Benlysta sales, which made $31.2m for HGS during the first quarter of 2012, are currently split between the two companies.

If GSK does acquire HGS it would retain all income made by Benlysta, as well as any future sales of darapladib and albiglutide.

9th May 2012

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