Human Genome capitulates, accepting raised offer from GlaxoSmithKline

Confirming weekend rumors (The Pharma Letter July 16), UK pharma giant GlaxoSmithKline (LSE: GSK) yesterday confirmed it has managed to do a deal with US partner Human Genome Sciences (Nasdaq: HGSI) to acquire the company by increasing its hostile tender offer from $13 to $14.25 per share in cash.

HGS rejected the original offer as not reflecting the company’s value and set about an auction of the company, for which final bids had to be placed by July 16, calling on GSK to enjoin the process, which the UK-based company declined. With the deadline approaching, it seemed to be clear that no alternative acceptable bids were forthcoming.

The agreed transaction values HGS at around $3.6 billion on an equity basis, or about $3 billion net of cash and debt, and represents a premium of 99% to the HGS closing price of $7.17 per share on April 18, 2012, the last day of trading before HGS publicly disclosed GSK’s initial private offer. The boards of directors of both companies have approved the transaction.