Glaxo raises its bid for Human Genome

GLAXOSMITHKLINE has agreed to buy Human Genome Sciences for $3 billion in cash, winning control of its US partner on the Benlysta lupus therapy after a three-month takeover battle and two decades of collaboration.

Glaxo raised its bid 9.6 per cent to $14.25 a share, almost twice the price of the stock on April 18th, the last day of trading before public disclosure of Glaxo’s initial $13-a-share offer.

Human Genome shareholders have until midnight New York time on July 27th to tender their shares, Glaxo said in a statement yesterday.

Including debt and cash, the deal is valued at $3.6 billion.

Drug-makers, facing generic competition in the US and price cuts in Europe, have been acquiring companies to add new medicines. Buying Rockville, Maryland-based Human Genome gives Glaxo full control over marketing Benlysta, which won US approval last year as the first new lupus drug in five decades.

Glaxo and Human Genome are also collaborating on two medicines that are in late-stage testing: albiglutide for diabetes and darapladib for heart disease.

The purchase will save at least $200 million by 2015, Glaxo said.

The company still plans to buy back as much as £2.5 billion in shares this year.

Glaxo has won US approval of more than 15 new drugs and vaccines since 2008, and last year won clearance for three new products, including Benlysta.

The company is trying to rebuild its diabetes business after the Avandia drug was withdrawn from the market in Europe in 2010, and sales were limited in the US because of an increased risk of heart attacks.

The drug-maker sold the first HIV drug 25 years ago, and is also staging a comeback in that market.

Glaxo is paying about 20 times revenue for Human Genome, according to data compiled by Bloomberg. That compares with the median of 7.9 times sales in a survey of more than 50 similar biotechnology deals over the past five years, the data show.

“The combination of GSK and HGS represents clear financial and strategic logic for both companies and our respective shareholders,” said Glaxo chief executive Andrew Witty. – (Bloomberg)