GSK’s billion Human Genome offer

Katherine Baffour 4 years ago 1

Human Genome rejected the approach from Britain’s biggest drugmaker last month, saying it did not reflect the company’s inherent value, but GSK insists its bid is full and fair.

The decision to push ahead with the cash offer, which is 81 percent above Human Genome’s share price before the bid, is an aggressive move that sets up GSK for a battle with those Human Genome investors who believe it is not offering enough.

"They will do fantastically well out of this – at $13 it is a steal," said Mark Evans, a fund manager at Taube Hodson Stonex, the sixth largest investor in Human Genome with a 5.6 percent stake.

"I still think it is very likely that they will have to pay more."

Human Genome shares closed at $14.62 on Tuesday – above GSK’s offer price but still only half the peak touched in April last year, when hopes were higher for its new drug for lupus, Benlysta.

GSK and the U.S. pioneer of gene-based drug discovery sell Benlysta together and the companies are collaborating on two other experimental drugs for diabetes and heart disease that could become significant sellers.

Buying Human Genome would give GSK full rights to these partnered drugs.

A spokeswoman for GSK declined to say exactly when this week the tender would be launched. The tender will remain open for 20 business days after its commencement.


Human Genome has hired Goldman Sachs and Credit Suisse to explore strategic alternatives, including a possible sale of the company, and has invited GSK to join the process.

But GSK, which is being advised by Lazard and Morgan Stanley, said on Wednesday it would not participate in that strategic review process.

"GSK’s participation in the process is unnecessary as its offer is not conditioned on due diligence or financing and can be completed expeditiously," it said in a statement.

"It is important for HGS shareholders to understand that GSK is committed to proceeding with its offer."

GSK’s partnership with the Rockville, Maryland-based company goes back two decades, and even though the deals between the two companies have no tricky change-of-control clauses, analysts doubt another company will emerge as a "white knight" bidder.

Any non-GSK acquirer would only get partial control of the key drugs, which could make it an unappetizing target.

GSK said its preference was to complete the deal on "a friendly basis in a timely fashion" and it remained willing to discuss its offer with Human Genome at any time.

Many drugmakers are seeking deals to bolster their pipelines, as older products lose patent protection, and GSK’s readiness to buy Human Genome is a sign of confidence in the drugs that the companies have been developing together. Home Page

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