GlaxoSmithKline's $2.6bn bid for genetic firm refused

GlaxoSmithKline yesterday made a hostile $2.6bn (£1.6bn) bid for Human Genome Sciences (HGS), its long-term partner on treatments including lupus medicine benlysta.

Britain's biggest drugmaker set out a $13-a-share offer for US-based biotechnology specialist HGS, compared with a closing share price the day before the bid of $7.16.

But the HGS board immediately rejected the approach, claiming it "does not reflect the value" of the company and said it was considering putting itself up for sale.

Glaxo and HGS have worked together successfully on benlysta, the first new drug approved for lupus in the US in half a century – although HGS's share price has been hit this year after initial sales of the drug disappointed.

Both companies are also co-developing two other experimental drugs: darapladib to treat heart disease and type-two diabetes drug albiglutide, which are both also in late-stage trials.

Glaxo chief executive Sir Andrew Witty said: "Having worked together with Human Genome Sciences for nearly 20 years, we believe there is clear strategic and financial logic to this combination for both companies and our respective shareholders – and that now is the appropriate time... for our two companies to combine."

Glaxo said it expected to achieve at least $200m in cost savings from the deal by 2015 and anticipated it would boost earnings by 2013.

The pharma giant said the acquisition would not influence its share buyback programme, and that it still expected to repurchase between £1bn and £2bn in shares this year.

Glaxo has hired Lazard and Morgan Stanley as financial advisors on the deal. Cleary Gottlieb Steen & Hamilton and Wachtell, Lipton, Rosen & Katz will supply legal advice. HGS has hired Goldman Sachs and Credit Suisse to protect itself from Glaxo, plus US law firm Skadden, Arps, Slate, Meagher & Flom and City giant DLA Piper.

So far this year, pharmaceutical deals worth $18.5bn have been announced, 5 per cent above the same time a year ago, according to Dealogic.