The folks at GlaxoSmithKline (GSK) and Human Genome Sciences have been busy over the last 24-48 hours. They’ve been secretly negotiating the right price for a takeover of Human Genome Sciences by GSK. Apparently, they’ve come quite close to striking a deal.
“Inadequate Offer” Leads to Adequate Offer
Currently, GSK offered a buyout plan in the past of $13 a share. But, the New York Times reports that Human Genome Sciences “swiftly rejected the bid as insufficient and instead put itself up for sale.” It’s not often that a company with over $100 billion in market value gets played this way by a much, much smaller company.
Human Genome Sciences’ ploy paid off though. They were lucky, too. Apparently, a few (if any) bids came in after they made the sale public; they got back in touch with GSK to “avoid a share price collapse.” At the same time, they got GSK to up the ante to $14 per share, or at least $2.8 billion for the buyout. There’s a very slim chance the price could go as high as $15 but for now that’s mainly speculation. $14 a share appears to be the sweet-spot for both companies.
Why the Buyout?
Pharmaceutical companies are extremely profitable. Their business relies on having the right medicines out and the right medicines in the pipeline. According to Reuters, “biotechnology companies are in increasing demand as Big Pharma companies seek new products” as a huge swath of patents expire for drugs currently on the market. GSK and Big Pharma know the future in most medicine is likely to be gene-based drugs.
Gene-based therapies and drugs are where Maryland-based Human Genome Sciences excels. It’s why they were so attractive to GSK. In fact, the New York Times adds that both companies have been sharing profits from a drug called Benlysta and also are working on two more drugs for heart disease and diabetes. Looks like this buyout is a good match for both companies.
Buyouts for the Rest of Us
Oftentimes, we read about these buyouts and mega-buyouts and think that’s just business as usual for the powerhouses of business. Maybe that’s true, but it’s not the whole picture. Buyouts, 50/50 ownerships, and even investment play just as vital a role in small business as they do in big business. Heck, even Content Equals Money has had some long term clients ask about big investments and even purchasing us.
Plus, it’s also that small businesses usually don’t have a marketing department that can get the word out for buyouts or takeovers that ultimately are good for business. We don’t hear about these sorts of things and it’s unfortunate. The more publicity a small business can get, the better. That applies to buyouts, mergers, new products, and everything you can think of. With the right content marketing set up, your customers and potential customers will be in the know and they will be thinking of your business, not the competition.
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