HGS shareholder challenges ‘poison pill’
pharmafile | May 31, 2012 | News story | Sales and Marketing | Benlysta, GSK, HGS, hostile bid
The saga of GlaxoSmithKline’s attempt to take over Human Genome Sciences (HGS) has taken another turn with legal action by an HGS investor.
Duane Howells is suing HGS in a Maryland court because HGS is using a so-called ‘poison pill’ – a defensive financial action – to ward off GSK’s hostile bid.
GSK’s $2.6 billion offer, rejected by HGS behind closed doors in April, was made public this month when GSK said to shareholders it would buy all their shares in HGS for $13 each in cash – a much higher figure than that at which they were actually trading.
However, the board of HGS recommended that no investor should tender shares to GSK because $2.6 billion is too low a price.
Instead, HGS has responded by making its own deal to its shareholders: they will receive a dividend of one share purchase right for each share of HGS’s common stock.
This deal to boost its shares – the ‘pill’ Howell’s law suit refers to – is designed to give the HGS board what it really wants: time to carry out its own review of the strategic alternatives for HGS.
GSK has already argued that it has had enough time to work out what its best course of action should be, and that HGS shareholders should now be allowed to make up their own minds.
The US lawsuit reflects this view, saying HGS’s tactic is ‘not a reasonable response’ and that it will “rob the company and its shareholders of the opportunity to obtain a premium change of control transaction”.
GSK and HGS are already wedded to their co-developed lupus treatment Benlysta, although its disappointing sales have contributed to HGS’s share price drop.
However, the HGS board says GSK has been ‘opportunistic’ in making its offer. “GSK approached HGS while its shares were trading near a 52-week low,” the company said in a statement.
“The board believes that GSK acted to take advantage of the company’s depressed stock price levels in its attempt to transfer the significant future value of Benlysta from HGS stockholders to GSK,” it concluded.
Adam Hill
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