GSK to acquire Human Genome Sciences for $14.25 per share in cash
As offer rises to a net deal value of about $3 billion, HGS agrees to be acquired
In a July 16 announcement, the companies notedthat they had entered into a definitive agreement under which GSK will acquireHGS for $14.25 per share in cash instead of the $13 per share figure GSK hadheld to for weeks. The transaction values HGS at approximately $3.6 billion onan equity basis, or approximately $3 billion net of cash and debt. Thisrepresents a premium of 99 percent to the HGS closing price of $7.17 per shareon April 18, the last day of trading before HGS publicly disclosed GSK'sinitial private offer and before the situation escalated into a hostile takeover attempt when HGS balkedat the offer.
The boards of directors of both companies haveapproved the transaction, and it is anticipated that shareholders of HGS willfollow that example.
"We are pleased to have reached a mutuallybeneficial agreement with HGS on friendly terms and believe the combination ofGSK and HGS represents clear financial and strategic logic for both companiesand our respective shareholders," said Andrew Witty, CEO of GSK. "Thetransaction meets GSK's strict financial criteria for acquisitions, and weexpect will deliver significant returns over the long-term. This is a naturalnext step in our nearly 20-year relationship with HGS, and we look forward toworking with HGS to integrate our businesses and to realizing the full value ofBenlysta, albiglutide, and darapladib for the benefit of patients and ourshareholders."
In their two-decade history collaborating, GSK andHGS have worked together on several compounds. The pair's two major projects,both of which are in late-stage development, are darapladib, indicated for thetreatment of atherosclerosis, and albiglutide, indicated for the treatment oftype 2 diabetes. GSK and HGS are also jointly marketing Benlysta, indicated forlupus, in a 50/50 profit-share scenario.
According to Witty, the transaction is well alignedwith GSK's long-term strategy of delivering sustainable growth, simplifyingGSK's business model, enhancing R&D returns and deploying capital withdiscipline. Through complete ownership of Benlysta, albiglutide and darapladib,GSK can simplify and optimize R&D, commercial and manufacturing operationsto advance these products most effectively and efficiently while securing thefull potential long-term value of the assets.
GSK anticpates at least $200 million in costsynergies to be fully realized by 2015 and expects the transaction to beaccretive to core earnings beginning in 2013.
"After a thorough analysis of strategicalternatives, HGS has determined that a combination with GSK is the best courseof action for our company and the best way to maximize value for ourstockholders," said H. Thomas Watkins, president and CEO of HGS. "HGS has had along and productive working relationship with GSK, and together we will beuniquely positioned to achieve the full potential of Benlysta and otherproducts in our pipeline for the benefit of those battling serious diseasearound the world. … We look forward to working with GSK to ensure a seamlesstransition for all of our stakeholders."