Reuters: Glaxo aims to replace entire HGS board

Forget the usual thin-end-of-the-wedge proxy-fight strategy. Rather than nominating a few directors to push its buyout agenda at Human Genome Sciences, GlaxoSmithKline plans a campaign to sweep the whole board out, Reuters reports. That would clear the way for its $2.6 billion hostile bid.

Citing sources, the news service says GSK ($GSK) has started scouting for candidates, and it could issue a solicitation to shareholders within a few weeks. The company would also extend its tender offer of $13 per share.

Glaxo and HGS ($HGSI) have been trading punches since GSK went hostile with its bid. After the usual back-and-forth about the adequacy or inadequacy of the offer, HGS launched an auction to bring in other bidders. Glaxo said phooey to that and pressed on with its hostile bid. Then, HGS adopted a shareholder rights plan, aka poison pill, to ward off its pursuer. Glaxo countered by saying that it would pull out if HGS didn't drop the poison pill. Then, a shareholder sued HGS to push the company to do just that.

Glaxo says it's the best owner for HGS, given the two companies' collaboration on key drugs, including the lupus treatment Benlysta. Analysts doubt that a white knight will ride in to snatch HGS out of Glaxo's clutches because of that close relationship.

Now that Glaxo is preparing for a board battle, any other bidders might be even more reluctant to step up. According to Reuters' sources, the British drugmaker is feeling increasingly confident about its chances. But it may have to raise its bid; the stock is trading at $13.69.

- read the Reuters exclusive