GlaxoSmithKline (GSK) is secretly negotiating acquisition of American firm Human Genome Sciences (HGS), in a $2.6 billion (£1.7 billion) deal, after HGS rejected its previous bid of $13 (£8.33) per share in April.
The deadline for bid ends today, and HGS is expected to announce the bidders for it and disclose further steps. GSK is the preferred bidder as it already co-owns Benlysta (which is a treatment for lupus), with HGS in a 50:50 joint venture.
The UK pharmaceutical group had launched the takeover in part to increase synergies and cost savings, while also hoping to boost sales of Benlysta. GSK initially ruled out the need to increase its offer, which it made directly to shareholders after failing to win agreement from the HGS board, and on which it had already extended the deadline.
HGS launched a consultation in an effort to find an alternative buyer and criticised GSK for refusing to participate, but failed to identify an alternative “saviour.” Companies including Celgene in the US distanced themselves from discussions.
The agreement is yet to be finalised and the companies are still working out last-minute details, company sources said. “It looks like a great conclusion for Glaxo. At around $14 a share, it is marginally higher than they first pitched but lower than I expected them to have to pay”, said Navid Malik, an industry analyst at Cenkos Securities.
The analyst sees the deal as a “nice to have” rather than a need to have for GSK, whose $112 billion (£72 billion) market value dwarfs that of Human Genome. GSK will now enjoy 100% of upswing if the biotech firm’s drugs live up to their promise.