December 22, 2024

DealBook: Glaxo Is Said to Be Near a Deal for Human Genome Sciences

10:43 p.m. | Updated GlaxoSmithKline of Britain is near a deal to buy the biopharmaceutical company Human Genome Sciences on friendly terms for about $2.8 billion, potentially ending a long hostile takeover campaign, a person briefed on the matter said on Sunday.

Under the new terms of the deal, GlaxoSmithKline would pay about $14 a share in cash, this person said.

An agreement could be announced as soon as Monday morning, this person said, cautioning that the talks might still fall apart.

A friendly deal between the two mark the end of Human Genome’s efforts to find an alternative buyer for the company. It would also end months of jockeying between the two drug companies, who are partners in developing the lupus drug Benlysta.

Biopharmaceutical companies like Human Genome have been in demand by acquirers in recent years. Bigger drug makers have been seeking to restock their product pipelines with new offerings as older treatments lose patent protection. Two weeks ago, Bristol-Myers Squibb agreed to a $7 billion deal to buy Amylin Pharmaceuticals, which has been developing a new drug to treat diabetes.

In April, GlaxoSmithKline first proposed to pay $13 a share to acquire Human Genome, 81 percent above its closing share price the day before the bid was announced. The British drug maker was seeking to take advantage of a steep drop in Human Genome’s share price in the last 12 months, a decline driven in part by high marketing costs for Benlysta.

But Human Genome swiftly rejected the bid as insufficient and instead put itself up for sale, inviting GlaxoSmithKline to participate in the auction process. Human Genome also put up defenses like a shareholder right’s plan aimed at thwarting a hostile takeover bid.

Still, GlaxoSmithKline decided to take its bid directly to Human Genome’s shareholders. It has extended that offer several times, and its latest extension is scheduled to expire on Friday.

Last week, Human Genome and GlaxoSmithKline began talks about a potential friendly transaction, the person briefed on the talks said. The deadline for takeover offers had been set for Monday.

Representatives for GlaxoSmithKline and Human Genome were not immediately available for comment.

Some analysts and investors have said that GlaxoSmithKline would be the natural buyer of Human Genome. The two split profits from sales of Benlysta, and are working together on two other treatments, for heart disease and for diabetes.

The lupus drug received approval from the Food and Drug Administration, making it the first new treatment for the disease in about 50 years. But sales have been slow and have fallen far short of expectations.

Human Genome’s heart disease drug, darapladib, has also been seen as a potentially promising new product, though it is still in clinical trials.

Any other drug maker would need to either buy out GlaxoSmithKline’s 50 percent stake in Benlysta and the other treatments, or content itself with sharing proceeds from the sales of the drugs.

But given Human Genome’s strenuous objections to GlaxoSmithKline’s bid, investors have long expected the British company to raise its offer price above $13 a share. Human Genome’s shares have traded above that level since the proposal was first announced, closing on Friday at $13.58.

News of the revived talks was reported earlier by The Telegraph of London and Reuters.

Article source: http://dealbook.nytimes.com/2012/07/15/glaxosmithkline-in-talks-to-buy-human-genome/?partner=rss&emc=rss