HGS shareholders vow to challenge takeover by GSK

GlaxoSmithKline (GSK) reeled in its long-term drug development partner Human Genome Sciences, with an agreed takeover offer pitched at about $3bn (£1.9bn), though some HGS shareholders immediately said they would challenge the deal.

HGS directors were threatened with a class action lawsuit alleging they breached their duty to shareholders by accepting the GSK offer, which was upped to $14.25 a share – better than the $13 originally tabled. At that price, the deal is double the $7.17 HGS shares were fetching before GSK's bid was disclosed in April.

It has taken the UK drugs giant several months to land its prize, after a battle that began when the US firm rejected its initial offer of $2.6bn in April. As HGS began scrabbling for rival offers to trump GSK, the British company said that it would make its deal hostile.

In the end, the choice facing 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.

Sir Andrew Witty, GSK's chief executive, 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 companies began working together almost 20 years ago, when GSK paid $125m in 1993 to establish a research partnership.

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 that they developed together, Benlysta, the first new treatment for the disease to have emerged in half a century.

The drug's sales have so far been sluggish, though analysts remain optimistic and there is also a pipeline of additional and potentially lucrative products.

These include drugs for diabetes and heart disease, in which GSK and HGS share a financial interest.

Thomas Watkins, chief executive of HGS, said that the company has had "a long and productive working relationship with GSK, and together we will be uniquely positioned to achieve the full potential of Benlysta and other products in our pipeline for the benefit of those battling serious disease around the world".

The law firm Levi & Korsinsky last night announced an investigation into potential breaches of fiduciary duty by HGS directors and into whether the company should have held out for a higher price.

The deal is the latest in a busy sector, as drug companies fight for new revenue as traditional moneyspinners come off patent protection.

Last month, Bristol-Myers Squibb said it would pay $5.3bn for diabetes drug maker Amylin.

Start your day with The Independent, sign up for daily news emails
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Pricing Analyst

£30 - 35k: Guru Careers: We are seeking a Pricing Analyst to join a leading e-...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K YR1: SThree: At SThree, we like to be dif...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is a mul...

Guru Careers: C# Project Team Lead

£55 - 65k (DOE): Guru Careers: A unique opportunity for a permanent C# Develop...

Day In a Page

Fifa corruption: The 161-page dossier that exposes the organisation's dark heart

The 161-page dossier that exposes Fifa's dark heart

How did a group of corrupt officials turn football’s governing body into what was, in essence, a criminal enterprise? Chris Green and David Connett reveal all
Mediterranean migrant crisis: 'If Europe thinks bombing boats will stop smuggling, it will not. We will defend ourselves,' says Tripoli PM

Exclusive interview with Tripoli PM Khalifa al-Ghweil

'If Europe thinks bombing boats will stop smuggling, it will not. We will defend ourselves'
Raymond Chandler's Los Angeles: How the author foretold the Californian water crisis

Raymond Chandler's Los Angeles

How the author foretold the Californian water crisis
Chinese artist who posted funny image of President Xi Jinping facing five years in prison as authorities crackdown on dissent in the arts

Art attack

Chinese artist who posted funny image of President Xi Jinping facing five years in prison
Marc Jacobs is putting Cher in the limelight as the face of his latest campaign

Cher is the new face of Marc Jacobs

Alexander Fury explains why designers are turning to august stars to front their lines
Parents of six-year-old who beat leukaemia plan to climb Ben Nevis for cancer charity

'I'm climbing Ben Nevis for my daughter'

Karen Attwood's young daughter Yasmin beat cancer. Now her family is about to take on a new challenge - scaling Ben Nevis to help other children
10 best wedding gift ideas

It's that time of year again... 10 best wedding gift ideas

Forget that fancy toaster, we've gone off-list to find memorable gifts that will last a lifetime
Paul Scholes column: With the Premier League over for another year, here are my end of season awards

Paul Scholes column

With the Premier League over for another year, here are my end of season awards
Heysel disaster 30th anniversary: Liverpool have seen too much tragedy to forget fateful day in Belgium

Liverpool have seen too much tragedy to forget Heysel

Thirty years ago, 39 fans waiting to watch a European Cup final died as a result of a fatal cocktail of circumstances. Ian Herbert looks at how a club dealt with this tragedy
Amir Khan vs Chris Algieri: Khan’s audition for Floyd Mayweather may turn into a no-win situation, says Frank Warren

Khan’s audition for Mayweather may turn into a no-win situation

The Bolton fighter could be damned if he dazzles and damned if he doesn’t against Algieri, the man last seen being decked six times by Pacquiao, says Frank Warren
Blundering Tony Blair quits as Middle East peace envoy – only Israel will miss him

Blundering Blair quits as Middle East peace envoy – only Israel will miss him

For Arabs – and for Britons who lost their loved ones in his shambolic war in Iraq – his appointment was an insult, says Robert Fisk
Fifa corruption arrests: All hail the Feds for riding to football's rescue

Fifa corruption arrests

All hail the Feds for riding to football's rescue, says Ian Herbert
Isis in Syria: The Kurdish enclave still resisting the tyranny of President Assad and militant fighters

The Kurdish enclave still resisting the tyranny of Assad and Isis

In Syrian Kurdish cantons along the Turkish border, the progressive aims of the 2011 uprising are being enacted despite the war. Patrick Cockburn returns to Amuda
How I survived Cambodia's Killing Fields: Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape the US

How I survived Cambodia's Killing Fields

Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape to the US
Stephen Mangan interview: From posh buffoon to pregnant dad, the actor has quite a range

How Stephen Mangan got his range

Posh buffoon, hapless writer, pregnant dad - Mangan is certainly a versatile actor