HGSI Accepts Glaxo's $14.25 Bid - Analyst Blog
17 Juillet 2012 - 6:12PM
Zacks
Human Genome Sciences (HGSI) and
GlaxoSmithKline plc (GSK) 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.
The Agreement
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tendered and not withdrawn as of July 13.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.
Our Take
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
time.
We currently have a Neutral recommendation on Human Genome,
which carries a Zacks #3 Rank (Hold rating) in the short run.
GLAXOSMITHKLINE (GSK): Free Stock Analysis Report
HUMAN GENOME (HGSI): Free Stock Analysis Report
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