HGS shareholders vow to challenge takeover by GSK
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Your support makes all the difference.GlaxoSmithKline (GSK) reeled in its long-term drug development partner Human Genome Sciences with an agreed takeover offer pitched at about $3bn (£1.9bn), although some shareholders in HGS said they would challenge the deal.
HGS directors were threatened with a class-action lawsuit alleging that they breached their duty to investors by accepting the GSK offer, which was upped to $14.25 a share – better than the $13 first tabled.
At that price, the deal is twice what $7.17 HGS shares were fetching before GSK's bid was disclosed in April.
It has taken the British drugs giant several months to land its prize, after a battle that began when the US company rejected its initial offer of $2.6bn in April.
As HGS began scrabbling for rival offers to trump GSK, its UK rival said it would make its deal hostile. In the end, the choice facing the HGS management was not between GSK and other bidders but between GSK and going it alone. No other suitors emerged because of the high cost of unwinding HGS's deep existing relationship with GSK.
GSK's chief executive, Sir Andrew Witty, left, called it "a mutually beneficial agreement" and the next logical step in the long relationship between the two companies. Annual cost savings could top $200m by 2015, GSK claimed.
The two pharmaceuticals companies began working together almost 20 years ago, when Brentford-based Glaxo paid $125m in 1993 to establish a research partnership with HGS.
HGS was one of the first biotech companies to emerge from the early 1990s push to map all of the genes in the human body. GSK and HGS jointly sell a drug for lupus.
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