American pharma firm rejects £1.6bn Glaxo bid

Julian Harris
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BRITISH pharmaceutical giant GlaxoSmithKline (GSK) has been knocked back by Human Genome Sciences, after tabling a $13 per share cash bid for the US-based biotechnology firm.

The offer was worth around $2.6bn (£1.62bn) yet dismissed as “unsolicited” and inadequate by the target company’s board.

“The offer does not reflect the value inherent in HGS,” it said yesterday, while leaving the door open for a future sale under different conditions. “The board of directors has authorised the exploration of strategic alternatives in the best interests of shareholders, including, but not limited to, a potential sale of the company,” it said.

GSK’s offer represents an 81 per cent premium to HGS’s closing stock price on Wednesday of $7.17. After yesterday’s announcement the company’s shares soared, nearly doubling to $14.17 in New York.

The attempted takeover is the latest bid by a large pharmaceutical firm to accumulate smaller biotech innovators. With pipelines drying up and a wave of patents approaching expiry, firms are turning to biopharma for future revenue.

“This rather stark dismissal of Glaxo’s not inconsiderable offer goes to show just how highly biotech companies such as HGS value their portfolios and pipelines, and how much potential they see for the future of medicine in their line of research,” said Paul Chapman of Marks & Clerk.

Large companies can often provide the capital and infrastructure to take early stage innovations through the necessary later phases of clinical trials and regulatory hurdles.

GSK and HGS already work together, and last year gained regulatory approval for Benlysta, a treatment for the immune system illness lupus.