GlaxoSmithKline (GSK) could end its interest in acquiring Human Genome Sciences (HGS) should the company refuse to drop its poison pill, a measure taken last week to thwart GSK's hostile approach.
HGS responded to GSK's direct appeal to shareholders by adopting a shareholder rights plan, providing investors with the right to buy more stock at a discounted price should one shareholder buy 15% or more.
HGS invited GSK to take part in the process, with the UK-based pharmaceutical continuing to reiterate its stance that it does not need to participate in the process as its takeover bid does not require due diligence.
Responding to HGS's poison pill approach, GSK has amended the conditions in its tender offer and added a condition requiring HGS to redeem the pill or make it inapplicable to GSK's potential acquisition of the company.
GSK's offer for the US-based biotech firm stands at $13 a share, which represents an 81% premium over the company's closing share price on 18 April 2012, the last trading day before the private offer was disclosed. Whilst GSK believes the offer represents "full and fair value", HGS has continuously rebuffed the approach, alleging that the offer does not "reflect the value inherent of HGS."
HGS has also accused GSK of waiting until the company's share price hits rock bottom before targeting an acquisition, with the company's share price falling significantly over the past year.
The two companies had previously enjoyed a close working relationship, collaborating on the creation of new medicines for nearly 20 years, with the most notable development being lupus drug Benlysta.
Image: GlaxoSmithKline's headquarters, located in London, UK. Photo courtesy of: GlaxoSmithKline