GlaxoSmithKline Plc plans to launch a campaign to replace the entire board of Human Genome Sciences Inc. with its own nominees, stepping up its $2.6 billion hostile bid for the U.S. biotech company, sources familiar with the situation said on Wednesday.
GSK intends to seek consent from Human Genome shareholders to replace the board with independent directors, the sources said. The consent solicitation process could come in the next few weeks, they said.
The British company has started reaching out to executives in the pharmaceutical industry as well as finance and governance experts to nominate as independent director candidates for Human Genome's board, they said.
GSK plans to nominate 12 directors to replace the entire Human Genome board, the sources said. GSK is also expected to extend its tender offer for Human Genome beyond June 7, the sources added, asking not to be named because the matter is not public.
GSK declined to comment.
Human Genome said in a statement: "The board rejected GSK's $13 per share offer as inadequate and initiated a process to explore strategic alternatives. GSK declined to enter the process and, through its offer, seeks to circumvent, disrupt and prematurely end the company's process to the disadvantage of HGS stockholders."
GSK's plan could send yet another signal to other potential bidders for Human Genome of its seriousness in pursuing this deal, making it harder for the U.S. biotech company to find a white knight willing to take on the UK pharma giant.
GSK and Human Genome together sell Benlysta, a new drug for the autoimmune condition known as lupus. The companies also collaborate on two other experimental drugs for diabetes and heart disease, currently in late-stage trials, that could become significant sellers.
One of the sources said GSK was feeling increasingly confident that shareholders would come around to its offer, but the UK company may have more work to do in persuading investors that its $13-per-share bid is good enough.
Complicating things further is the shareholder base of Human Genome; the top 10 shareholders owned more than 75 percent of the company as of the end of last quarter.
Human Genome's by-laws allow its shareholders, including GSK, to run a consent solicitation.
GSK took its offer directly to Human Genome's shareholders after its bid was rejected by the Human Genome board.
GSK said last week it would not proceed with its offer unless the U.S. company dropped a "poison pill" shareholder rights plan imposed to block any unwanted takeover.
A Human Genome shareholder has filed a lawsuit against the board and asked a Maryland court to temporarily restrain the company from using the poison pill.
Shares of Humane Genome were off 13 cents at $13.69 on the New York Stock Exchange, above GSK's offer.
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