GlaxoSmithKline‘s (NYSE:GSK) $2.6 billion offer to buy Human Genome Sciences (NASDAQ:HGSI) has enticed holders of 474,029 shares of the Maryland biotechnology company to tender their stock for the sale.
The remaining shareholders now have the rest of June to consider GSK’s offer, which amounts to $13 per share. GSK is now extending its offer until 5 p.m. on June 29. The offer was set to expire at the end of the day on June 7. But the shares tendered are just a drop in the bucket; HGS responded to GSK’s hostile takeover attempt by noting the total shares tendered so far represents less than 1 percent of outstanding shares. HGS issued a statement saying it continues to believe GSK’s offer price is “inadequate and does not reflect the value inherent in HGS.”
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While GSK is trying to secure a sale within this month, HGS has a different timeline in mind. The company had adopted a “poison pill” provision that would dilute GSK’s holdings in the event that the British pharmaceutical giant went forward with its hostile takeover attempt. The poison pill lasts for one year and HGS insists it needs that time to consider all of its alternatives, including competing bids. HGS has said that it has had discussions with “a number of parities, including major pharmaceutical and biotechnology companies” and has entered into confidentiality agreements with some of them. So far, no official bid has emerged. But HGS is firm in sticking with its timeline.
“We are committed to completing our exploration of strategic alternatives as expeditiously as possible, and the HGS Board of Directors recommends that HGS stockholders reject GSK’s tender offer and not tender any of their shares to GSK,” HGS said in the statement.
GSK, which has its U.S. headquarters in Research Triangle Park, North Carolina, is trying to remedy the poison pill by replacing the HGS board. Reuters and the Financial Times have reported that GSK is contacting executives in the pharmaceutical industry and finance to nominate as candidates for HGS’ board of directors. The company plans a consent solicitation process, in which the company will try to persuade HGS shareholders to replace the HGS board.
GSK and HGS are partners on lupus drug Benlysta, which was approved in the United States and Europe last year. They are also partners on a type 2 diabetes treatment and a cardiovascular disease drug candidate, both of which are in late-stage clinical trials. GSK has said that its offer includes the value of Benlysta and the partnered drug pipeline. So far, HGS and the vast majority of its shareholders believe otherwise.
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