GlaxoSmithKline plc GSK and Human Genome Sciences HGSI
today announced that the companies have entered into a definitive agreement
under which GSK will acquire HGS for US$14.25 per share in cash. The
transaction values HGS at approximately US$3.6 billion on an equity basis,
or approximately US$3 billion net of cash and debt, and represents a premium
of 99% to the HGS closing price of US$7.17 per share on 18 April 2012, the
last day of trading before HGS publicly disclosed GSK's initial private
offer. The Boards of Directors of both companies have approved the
transaction.
The transaction is well aligned with GSK's long-term strategy of delivering
sustainable growth, simplifying GSK's business model, enhancing R&D returns
and deploying capital with discipline. Through complete ownership of
BENLYSTA, albiglutide and darapladib, GSK can simplify and optimize R&D,
commercial and manufacturing operations to advance these products most
effectively and efficiently while securing the full potential long-term
value of the assets. GSK expects to achieve at least US$200 million in cost
synergies to be fully realized by 2015, subject to appropriate consultation,
and expects the transaction to be accretive to core earnings beginning in
2013. GSK also assessed the potential returns of this acquisition relative
to its long-term share buyback program. As part of this ongoing program, GSK
continues to expect to repurchase (GBP)2-2.5 billion in shares in 2012.
Sir Andrew Witty, Chief Executive Officer of GSK, 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 GSK's 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."
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