Glaxo Buys Human Genome Sciences for $3.6B, Sending Both Stocks Up

GlaxoSmithKline PurchaseFrom across the ocean in London came news Monday that GlaxoSmithKline (GSK) has bought Human Genome Sciences (HGSI) for $3. billion, or $14.25 per share, with the net value listed a $3 billion minus cash and debt. This news finalizes the foffer that GSK initially made in mid-April, when HGSI was trading just slightly more than $7 per share. Since that initial offer, HGSI stock has nearly doubled in value, and was currently trading Monday at about $14.20 per share, up nearly 5 percent since the market opened. Glaxo, by the way, is up 1 percent in early Monday trading.

In a joint press release announcing the deal, GSK CEO Sir Andrew Witty said, “We are pleased to have reached a mutually beneficial agreement with HGS on friendly terms and believe the combination of GSK and HGS represents clear financial and strategic logic for both companies and our respective shareholders. The transaction meets GSKs strict financial criteria for acquisitions, and we expect will deliver significant returns over the long-term. This is a natural next step in our nearly 20-year relationship with HGS, and we look forward to working with HGS to integrate our businesses and to realizing the full value of BENLYSTA, albiglutide, and darapladib for the benefit of patients and our shareholders.”

H. Thomas Watkins, CEO of Human Genome Sciences, said, “After a thorough analysis of strategic alternatives, HGS has determined that a combination with GSK is the best course of action for our company and the best way to maximize value for our stockholders. HGS has had a long and productive working relationship with GSK, and together we will be uniquely positioned to achieve the full potential of BENLYSTA and other products in our pipeline for the benefit of those battling serious disease around the world. I would like to thank the dedicated employees of HGS, who have worked tirelessly to achieve breakthrough results and are the foundation of our success. We look forward to working with GSK to ensure a seamless transition for all of our stakeholders.”

The tender offer has been extended to July 27 to provide time for all shares in the transaction to be accounted. Paperwork has been filed with the SEC to finalize the deal officially. Those hedge funds who were invested in HGSI and Glaxo at the end of March have likely seen some nice returns in the months leading up to this announcement. Ken Fisher’s Fisher Asset Management, for example, was invested more than $500 million in GSK at the end of March, while Peter Eichler’s Alethela Research and Management was into HGSI for nearly $43 million at the end of the first quarter of 2012 when the stock was half of its current value.

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