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Human Genome Sciences Balks at $2.6B Takeover Bid

New York Times: Analysts still expect GlaxoSmithKline to buy Rockville-based biotech.

Human Genome Sciences rejected a $2.59 billion takeover bid by British pharmaceutical giant GlaxoSmithKline on Thursday, company officials said in a news release.

But the board of directors of the Rockville-based biotechnology firm still is considering selling.

The board, “in consultation with independent financial and legal advisors, has carefully reviewed and considered the GSK offer and has determined that the offer does not reflect the value inherent in HGS,” the release said.

The company’s board “has authorized the exploration of strategic alternatives in the best interests of shareholders, including, but not limited to, a potential sale of the Company,” the release said.

The hostile cash offer equaled $13 a share. The proposed sale would have been “an 81 percent premium on Human Genome’s closing share price on Wednesday,” The New York Times reported.

shares closed at $7.17 on Wednesday, The Washington Post reported. The stock opened Thursday at $14.20 a share and has hovered near that mark for much of the day.

Glaxo’s offer follows months of takeover rumors, Washington Business Journal reported.

Human Genome’s share price has dropped by as much as 75 percent from a year ago, The Times reported.

The drop is attributed to a costly launch and poor initial reviews for the lupus drug Benlysta. The drug, developed in partnership with Glaxo, was .

The approval sent Human Genome stocks soaring to $28.02 per share a year ago today, the Business Journal reported.

But Human Genome “reported a $381 million loss last year, following a $233 million loss in 2010,” The Times reported.

Analysts predicted the sale ultimately would happen, at $15 to $20 per share, The Times reported.

The Business Journal quoted a letter from Glaxo’s chief executive to Human Genome CEO Tom Watkins saying that the buyout offer “would deliver immediate certain value to HGSI shareholders that is superior to what we believe you can reasonably expect to create as a standalone company.”

The takeover bid follows the 2007 acquisition of Gaithersburg-based by another British pharmaceutical company, AstraZeneca.

That deal was for $15.6 billion, “a price tag still criticized today as way too big,” the Business Journal’s Bill Flook wrote.

Human Genome shares reached an all-time high of $115 in 2000, The Times reported. The share price gave the company a market value of nearly $12 billion—nearly five times Glaxo’s recent offer.

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