Not all Human Genome Science (Nasdaq: HGSI) shareholders agree with the company position that GlaxoSmithKline‘s (NYSE: GSK) $2.6 billion purchase offer is insufficient.
An HGS shareholder has filed a suit against the board and asked a court to temporarily restrain the Maryland company from using a “poison pill” to fend off the hostile takeover attempt. In the suit, plaintiff Duane Howell said that the poison pill plans hold “shareholders hostage to the board and prohibit GSK and other potential acquirers from taking offers to purchase the company,” Reuters reported.
The suit Duane Howell, individually and all others similarly situated v. H. Thomas Watkins, et al, was filed last Friday in circuit court for Montgomery County, Maryland.
GSK and HGS are partnered on lupus drug Benlysta as well as late-stage clinical compounds targeting diabetes and cardiovascular disease. Benlysta was projected to become a blockbuster drug. And it may yet become one. But since receiving approval last year, Benlysta sales have been disappointing and HGS’ stock has plummeted in the last year. GSK’s $13 per share offer was an 80 percent premium over HGS’ closing price before the offer became public on April 19.
HGS rejected GSK’s offer and claimed the price did not reflect the company’s true value. Britain-based GSK countered by taking the offer directly to shareholders with a June 7 deadline, which in turn led HGS to adopt a poison pill. The defensive tactic, triggered if GSK’s acquires a greater than 15 percent stake in HGS, allows shareholders to acquire additional HGS shares at a discount. This so-called poison pill dilutes the stakes of the acquirer.
GSK, which maintains its U.S. headquarters in Research Triangle Park, North Carolina, last week added a condition to its offer that the poison pill be remedied in order for the company to proceed with the purchase. But GSK did not change its offer price, nor did it alter its deadline.