Human Genome Sciences Accepts Offer From GSK

Human Genome Sciences has agreed to be purchased by GlaxoSmithKline in a transaction valued at about $3.6 billion. The decision marks HGS’s failure to attract a higher offer after it rejected an overture by the British drug firm in April. After turning down that initial bid by GSK, HGS hired Goldman Sachs and Credit Suisse to explore other options.

GSK will pay $14.25 per share in cash, which is almost double HGS’s closing price of $7.17 per share on April 18, the last day of trading before HGS publicly disclosed GSK’s initial offer of $13.00.

Under the agreement, GSK will attain full ownership of Benlysta, a monoclonal antibody developed with HGS and approved last year for the treatment of lupus, an autoimmune disorder. The drug is the only commercial product to result from a partnership between the two firms dating back to 1993, two years after HGS’s founding. The companies have two other drugs in Phase III clinical trials: albiglutide, to treat type 2 diabetes, and darapladib, to treat heart disease.

GSK CEO Andrew Witty calls the purchase a “natural next step in our nearly 20-year relationship with HGS.” GSK says acquiring HGS will allow it to optimize R&D, manufacturing, and commercial operations. GSK expects to achieve $200 million in cost savings by 2015.

The deal follows a short run of contentious attempts by drug companies to acquire biotech firms, including Sanofi’s six-month wrangle to acquire Genzyme and Roche’s failed hostile bid for Illumina. More recently, after an initial rejection, Bristol-Myers Squibb signed a deal to acquire Amylin in partnership with AstraZeneca.