Glaxo bid for biotech firm turns hostile
PHARMA giant GlaxoSmithKline stepped up its pursuit of Human Genome Sciences (HGS) yesterday, taking its $2.6bn (£1.6bn) bid directly to shareholders.
GSK’s first bid for its long-term partner was last month rejected by HGS’s board, which insisted it undervalued the company.
But the British behemoth is keen to get full control of a string of potentially lucrative drugs that it developed with HGS.
GSK said in a statement it will not accept HGS’s invitation to take part in a strategic review, preferring to appeal directly to investors via a hostile bid.
Maryland-based HGS, which launched the review after Glaxo’s initial approach, did not completely reject yesterday’s move but advised shareholders to take no action for now.
It said in a statement that it would comb through the bid with its financial and legal advisers. The board repeated its claim that at $13 a share, GSK’s offer “does not reflect the value inherent in HGS”.
US-listed shares in the target firm are trading around $14.50, and analysts and investors alike expect GSK to raise its offer to win the firm round.
“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 HGS with a 5.6 per cent stake. “I still think it is very likely that they will have to pay more.”
But Seymour Pierce analyst Mike Mitchell said that “it will be difficult for shareholders to ignore the certainty of a cash offer”.
A bidding war for the firm is unlikely, as an acquirer other than GSK would only be buying partial control of key drugs, including lupus medication Benlysta and experimental drugs to treat heart disease and diabetes.
ADVISERS
MORGAN STANLEY
LAZARD GOLDMAN SACHS CREDIT SUISSE
GlaxoSmithKline is taking financial advice from Morgan Stanley and Lazard during its transatlantic pursuit of Human Genome Sciences.
Morgan Stanley has a long-standing pedigree in the healthcare sector, acting for the likes of Pfizer during the recent $11.9bn sale of its baby nutrition unit; AstraZeneca on its $1.3bn Ardea acquisition; and acting as Shire’s corporate broker.
Head of healthcare banking Clint Gartin and senior pharma banker Susan Huang often feature in M&A deals in the sector, though Morgan Stanley would not comment on the identity of GSK’s lead bankers on this acquisition.
The team at Lazard includes global head of investment banking Antonio Weiss and head of European life sciences David Gluckman.
The legal side of the bid is being handled by Cleary Gottlieb Steen & Hamilton and Wachtell, Lipton, Rosen & Katz.
Acting for HGS as it weighs its options are Credit Suisse and long-time adviser Goldman Sachs, which helped the firm raise $850m through stock offerings in 2009.
Skaddens and DLA Piper are advising on the legal aspects of the firm’s strategic review.