It's a done deal. After months of hard-to-get behavior on both sides, GlaxoSmithKline and Human Genome Sciences have come to terms: $14.25 per share, or $3 billion. That's $1.25 per share higher than GSK's ($GSK) previous bid, but less than the $15 or so analysts had been expecting--and probably less than HGS ($HGSI) had been hoping.
With the deal, GSK gets full rights to Benlysta, a lupus treatment approved to great fanfare last year. So far, the drug hasn't performed up to expectations, and budget-minded regulators have refused to recommend it. But that could change as doctors become more familiar with it. Plus, HGS brings pipeline drugs for diabetes and heart disease, and the latter is pegged as a potential blockbuster.
Buying HGS is expected to pay off on the cost side, too. Glaxo says it's looking for at least $200 million in savings by 2015. And by next year, the deal will hike core earnings, GSK says.
As you know, Glaxo has been trying to buy HGS for months. The British drugmaker launched a hostile bid in mid-April. But HGS had said the $2.6 billion offer was too low. The company tried to auction itself off to a higher bidder--it set today as the deadline for offers--but as Reuters reports, investors were applying pressure to negotiate with GSK.
"We are pleased to have reached a mutually beneficial agreement with HGS on friendly terms," GSK CEO Andrew Witty said. "The transaction meets GSK's strict financial criteria for acquisitions, and we expect will deliver significant returns over the long-term. ... [W]e look forward to working with HGS to integrate our businesses and to realizing the full value of Benlysta, albiglutide, and darapladib."