Human Genome Sciences ($HGSI) won a court battle in its hostile takeover fight with partner GlaxoSmithKline ($GSK), but faces an ever-expanding and ugly war.
A judge Thursday rejected an effort to neutralize the so-called "poison pill" shareholder rights plan that Human Genome has swallowed in an effort to keep GSK at bay, Bloomberg reports. The one-year plan would dilute shares if one investor gets a 15% stake in the drugmaker, making a takeover more expensive. The company says it needs the time to evaluate all legitimate possibilities for getting more value for the company than if it were to accept GSK's $2.6 billion bid. Shareholder Duane Howell challenged the plan but a Maryland judge shot down an effort for an expedited hearing on the matter, a blow to GSK.
The duel between the two drugmakers took another turn this week when word leaked out that GSK would not try to get a few allies elected to Human Genome's board to vote for a sale. Instead, Reuters reports, it will attempt to sweep the board clean and replace it with favorable members. Citing sources, Reuters says GSK is lining up replacements and may make an offer to shareholders within a few weeks. The company would also extend its tender offer of $13 per share. The HGS board has urged investors to reject that offer as too low and let it look at alternatives.
Of course, if the judge had invalidated the poison pill proposition, the whole matter would have been much easier for GSK. Since that didn't happen, the fight will drag on, distracting both companies from their drug development business while they each try to secure their futures.