Human Genome Sciences
) recently announced a definitive agreement under which the latter
will acquire the former for $14.25 per share in cash. With this
acquisition, Glaxo will gain full ownership of lupus drug Benlysta
along with albiglutide and darapladib.
Glaxo had first approached Human Genome in April 2012 with an
offer price of $13 per share, which represented a premium of 81% to
Human Genome's previous day's closing share price.
Despite the high premium, Human Genome's board of directors
rejected the offer, saying the price was inadequate. Glaxo
subsequently launched a tender offer which was scheduled to expire
on July 20, 2012.
Glaxo's $14.25 offer price represents a premium of 99% to Human
Genome's closing share price on April 18, 2012, the day before the
first offer. The transaction value is approximately $3.6 billion on
an equity basis or $3 billion (net of cash and debt).
Glaxo's tender offer was amended to $14.25 per share and has
been extended until July 27, 2012. Around 427,042 shares were
tendered and not withdrawn as of July 13.
Glaxo expects to realize cost synergies of at least $200 million
by 2015. The company expects the acquisition to positively impact
its core earnings from 2013.
Human Genome's acceptance of the raised offer does not come as a
surprise. We always believed that chances of any other company
acquiring Human Genome were low with Glaxo, a long-time partner of
the company, in the fray. With the boards of both companies giving
the nod, the completion of the acquisition is now just a matter of
We currently have a Neutral recommendation on Human Genome,
which carries a Zacks #3 Rank (Hold rating) in the short run.
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HUMAN GENOME (HGSI): Free Stock Analysis Report
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