GlaxoSmithKline has been knocked back in its second attempt at acquiring Human Genome Sciences (HGS) in a $13-a-share deal that values the US-based biotechnology company at $2.6bn (£1.6bn). GSK's attempt at taking over HGS is a standard ploy in the pharma industry: buying out a partner company, rather than handing over money in royalties. GSK may yet come back with an improved offer and investors can take comfort that, despite the initial outlay, the deal would add to earnings almost immediately. It further bolsters the buy case for GSK through its ability to diversify its operations.
The impetus for the acquisition is that GSK and HGS developed lupus treatment Benlysta together in partnership, receiving US Food and Drug Administration blessing for commercial sale last year. Sales of the product have been growing slowly, contrary to many analysts' forecasts, with around $25m in the final quarter. But an improvement is forecast and the product would benefit hugely with the full weight of GSK's marketing operation behind it.
