After a lowball offer, holding out for more can be a dangerous situation. The acquired company either needs a white knight to come in and top its unsolicited suitor or for the suitor to come to its senses.
Human Genome Sciences
Fortunately for HGS, GlaxoSmithKline
Of course, the offer was only 9.6% higher than Glaxo's initial $13-per-share offer back in April, suggesting there was no white knight in the works. Celgene
With the discrepancy on valuation, I'm a little surprised the deal ended up being all cash rather than including a contingent value right, as Sanofi
With shares trading fairly close to $14.25 last week, there wasn't much wiggle room to add a CVR and lower the price without it getting close to a take-under. Investors would have surely balked at a cash price below Friday's close even if there was $5 or more potentially coming if Glaxo hit certain milestones.
It sure looks like Glaxo got a good deal here, but it wasn't a total steal. At a cost of $3 billion net of cash and debt, sales of Benlysta will need to increase substantially to justify the purchase; fortunately, they're headed in the right direction.
The big losers in all this seem to be the investors who bought shares after the phase 3 trial successes were announced. The takeout price is less than half the post-approval highs set back in early 2011.
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