Issue Date: April 23, 2012
GlaxoSmithKline Offers $2.6 Billion To Buy Human Genome Sciences
GlaxoSmithKline has made an unsolicited $2.6 billion bid for its long-standing partner Human Genome Sciences. The biotech firm has rejected the bid as too low and has hired Goldman Sachs and Credit Suisse to explore its options, including a sale to GSK or another firm.
GSK and HGS have been drug development and marketing partners since 1993, just two years after HGS was founded. To date, only one product has emerged from the pact: Benlysta, a monoclonal antibody approved last year to treat lupus. However, the companies have two other drug candidates in Phase III clinical trials: albiglutide, to treat type 2 diabetes, and darapladib, to treat heart disease.
Buying HGS outright, GSK says, would simplify R&D, manufacturing, and sales operations for all three products, yielding some $200 million in cost savings by 2015.
The question now, Bernstein Research stock analyst Timothy Anderson says in a note to clients, is whether GSK will raise its bid or another firm will step forward. “Both are conceivable, but it is likely only to be the former, as any other non-GSK acquirer would only get half of the various assets,” he writes. “In most cases acquiring companies want full control—not partial control—over what they are buying.”
Drug companies are increasingly resorting to aggressive tactics to expand their portfolios. Sanofi fought with Genzyme for more than six months before winning over the biotech firm in February 2011. And Roche made a hostile bid for the gene-sequencing firm Illumina but recently dropped it (see page 19).
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