GSK finalizes Human Genome Sciences acquisition for $14.25 per share in cash
The transaction values HGS at approximately $3.6 billion on an equity basis, or approximately $3 billion net of cash and debt
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In a July 16 announcement, the companies noted that they hadentered into a definitive agreement under which GSK will acquire HGS for $14.25per share in cash instead of the $13 per share figure GSK held to for weeks.The transaction values HGS at approximately $3.6 billion on an equity basis, orapproximately $3 billion net of cash and debt. This represents a premium of 99percent to the HGS closing price of $7.17 per share on April 18, the last dayof trading before HGS publicly disclosed GSK's initial private offer and beforethe situation escalated into a hostile takeover attempt when HGS balked at theoffer.
The boards of directors of both companies have approved thetransaction, and it is anticipated that shareholders of HGS will follow thatexample.
"We are pleased to have reached a mutually beneficialagreement with HGS on friendly terms and believe the combination of GSK and HGSrepresents clear financial and strategic logic for both companies and ourrespective shareholders," said Andrew Witty, CEO of GSK. "The transaction meetsGSK's strict financial criteria for acquisitions, and we expect will deliver significantreturns over the long-term. This is a natural next step in our nearly 20-yearrelationship with HGS, and we look forward to working with HGS to integrate ourbusinesses and to realizing the full value of Benlysta, albiglutide anddarapladib for the benefit of patients and our shareholders."
In their two-decade history collaborating, GSK and HGS haveworked together on several compounds. The pair's two major projects, both ofwhich 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 aligned withGSK's long-term strategy of delivering sustainable growth, simplifying GSK'sbusiness 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 anticipates at least $200 million in cost synergies tobe fully realized by 2015 and expects the transaction to be accretive to coreearnings beginning in 2013.
"After a thorough analysis of strategic alternatives, HGShas determined that a combination with GSK is the best course of action for ourcompany and the best way to maximize value for our stockholders," said H.Thomas Watkins, president and CEO of HGS. "HGS has had a long and productiveworking relationship with GSK, and together we will be uniquely positioned toachieve the full potential of Benlysta and other products in our pipeline forthe benefit of those battling serious disease around the world. … We lookforward to working with GSK to ensure a seamless transition for all of ourstakeholders."
