Glaxo Presses Human Genome By Extending Offer To July 20
06/29/2012| 09:46am US/Eastern
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--Glaxo extends offer to July 20 - four days after HGS deadline for bids from alternative suitors
--Glaxo reiterates that its $13-a-share offer price is fair value
--HGS responds by again rejecting Glaxo's offer, says it's too low
(Adds response from Human Genome Sciences and detail in final six paragraphs.)
By Sten Stovall
LONDON--GlaxoSmithKline PLC (GSK) Friday kept up the pressure on Human Genome Sciences Inc. (>> Human Genome Sciences) by extending its offer for the U.S. biotech company to July 20, four days after the target company's deadline for finding alternative suitors.
Britain's biggest drug maker, Human Genome Science's long-time partner, has taken its $2.6 billion bid for the pioneer of gene-based medicine discovery direct to shareholders through a tender offer after HGS spurned the $13-a-share offer, initially made in April, as being too low.
HGS has also adopted a "poison pill" shareholder rights plan in a bid to fend off Glaxo and invited other companies to make a counter offer.
But no counter bidder has emerged.
Glaxo insiders say that is due to the U.K.-based group's partnerships with HGS around key drugs. Glaxo co-markets lupus drug Benlysta with HGS. The biotech also has financial interests in other experimental drugs under development at Glaxo, including darapladib for cardiovascular disease and once-weekly diabetes drug albiglutide.
"Extension of the tender offer to 20 July will provide HGS shareholders the opportunity to evaluate the outcome of the HGS Board's process relative to GSK's offer," Glaxo said Friday.
"Based on circumstances at that time, GSK will consider all available options regarding its offer but can make no assurance that the tender offer will be further extended."
HGS responded by again rejecting Glaxo's offer as inadequate and recommended that shareholders take no action. It also noted that less than 1% of its outstanding shares have been tendered to Glaxo.
"The GSK offer price is inadequate and does not reflect the value inherent in HGS," HGS said in a statement. "Our board has authorized the exploration of strategic alternatives in the best interests of stockholders, including a potential sale of the company, and has set a bid date of July 16, 2012, for the submission of definitive proposals to acquire all outstanding common shares of HGS. This process continues to be active and fully underway."
Glaxo has twice been invited and twice declined to join HGS's strategic review.
"We are committed to completing our exploration of strategic alternatives as expeditiously as possible and in a manner that ensures that HGS stockholders have the benefit of a complete and fair process. The HGS Board of Directors recommends that HGS stockholders reject GSK's tender offer and not tender any of their shares to GSK."
With 198.5 million shares in issue, Glaxo's offer price bid would value HGS at around $2.6 billion. At 1324 GMT, Glaxo shares were flat at 1,445 pence, giving the U.K. company a market value of about GBP72.02 billion.
-Write to Sten Stovall at Sten.Stovall@DowJones.com
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