GSK notes that its tender offer represents apremium of 81 percent to HGS's closing share price of $7.17 on April 18, thelast trading day before HGS publicly disclosed GSK's private offer to acquirethe company, and GSK says that it "continues to believe its offer representsfull and fair value and is in the best interests of both companies'shareholders. It is well aligned to GSK's long-term strategy of deliveringsustainable growth, simplifying GSK's business model, enhancing R&Dreturns, and deploying capital with discipline. For HGS shareholders, itprovides immediate liquidity at a substantial premium while eliminating furtherexposure to the significant execution risk inherent in HGS achieving its futuregrowth objectives."
In coming up with its offer to HGS andsubsequently directly to shareholders as it moved to hostile mode, GSK's notesthat its offer "reflects the value of Benlysta, darapladib, albiglutide, HGS'soperating and financial assets, and expected cost synergies of at least $200million."
Rockville, Maryland-based HGS maintains thatthe offer does not, in fact, reflect the full value of the company.
"As previously announced," HGS note June 8, "our board has authorized the exploration ofstrategic alternatives in the best interests of stockholders, including apotential sale of the company. This process continues to be active andfully underway. GSK declined to enter the process and, through itsunsolicited tender offer, seeks to circumvent, disrupt and prematurelyend the company's process to the disadvantage of HGS stockholders. Weare committed to completing our exploration of strategic alternatives asexpeditiously as possible, and the HGS board of directors recommendsthat HGS stockholders reject GSK's tender offer and not tender any oftheir shares to GSK."
Analystsgenerally seem in agreement that GSK will have to raise its offer slightly toseal the deal, possibly at somewherearound $15 per share. Few seem to think that a rival will rise up with a betterdeal for HGS, as there is a long history of partnerships between the twocompanies going back some 20 years, and any company other than GSK that wouldacquire HGS would only gain partial control of HGS' key drugs.
One of those key drugs, Benlysta (belimumab), which is among the GSK/HGS partnerships, received FDA approval in March 2011 for the treatment ofautoantibody-positive adult patients with active, systemic lupuserythematosus who are receiving standard therapy, making it the firstnew approved drug for lupus in more than 50 years—as well as the first HGSproduct to receive FDA approval.