Unless GlaxoSmithKline (NYSE:GSK) sweetens its offer to buy Human Genome Sciences (NASDAQ:HGSI), a hostile takeover will come with a bitter taste.
In rejecting GSK’s nearly $2.6 billion offer today, HGS’ board of directors also adopted a “poison pill.”
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If the British pharma giant gets a 15 percent or greater stake in HGS without board approval, the shareholder rights plan gives HGS stockholders the right to purchase additional shares at a discount, which would dilute GSK’s holdings. This plan applies only to HGS shareholders as of May 29 — prior to the June 7 expiration date of GSK’s offer.
GSK had tried to force HGS into making a quick decision about the offer. Last week, GSK, which has its U.S. headquarters in Research Triangle Park, North Carolina, said it would go directly to HGS shareholders with its offer to buy the Maryland biotechnology company for $13 per share. GSK today reiterated its position that its offer, an 81 percent premium over HGS’ stock price before the offer became public, was “full and fair.” HGS said that no decision has been made whether to sell the company, but it just wants more time. The poison pill plan buys HGS that time. It lasts for one year; long enough, the company said, to allow HGS to review its options and consider other offers.
And apparently there are other suitors. HGS said that its review process has already led to “discussions with a number of parties, including major pharmaceutical and biotechnology companies” about a possible deal. The company added that it has entered into confidentiality agreements with some of these companies.
HGS added that financial advisers Credit Suisse Securities and Goldman Sachs told the company on Wednesday that GSK’s offer was financially inadequate for HGS shareholders. Those opinions will be included in HGS’s securities filings. HGS reiterated that the GSK offer does not reflect its value and growth potential not only of lupus drug Benlysta, but also of drug candidates that are in clinical development. Diabetes drug candidate albiglutide and cardiovascular disease candidate darapladib are both in late-stage clinical trials and are partnered with GSK.
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