NEW YORK GlaxoSmithKline Plc (GSK.L) has lined up candidates to replace the entire board of Human Genome Sciences Inc HGSI.O as it weighs options after its hostile $2.6 billion bid for the U.S. biotech company was rejected, a source familiar with the situation said on Tuesday.
The British pharmaceutical giant will wait to see the outcome of Human Genome's ongoing efforts to find a buyer in a separate auction process before deciding its next move, including whether to try to replace the U.S. company's board, the source said.
The source asked not to be named because the matter is not public. Human Genome did not have immediate comment. GSK could not be reached immediately for comment.
Human Genome, whose board has spurned GSK's $13 per share offer as inadequate, has set a July 16 deadline for definitive takeover offers from other parties. GSK, meanwhile, has taken its bid for the pioneer of gene-based medicine discovery direct to its shareholders and extended its tender offer until July 20.
Sources told Reuters in May that GSK intends to seek consent from Human Genome shareholders to replace its entire 12-member board, and the consent solicitation process could begin in a few weeks. GSK had started reaching out to directors in the pharmaceutical and biotech industry as well as finance and governance experts, sources said at that time.
GSK has now lined up 12 candidates who have agreed to be its nominees, and also has prepared the rest of paperwork needed to initiate consent solicitation, the source said.
If it decides to run the process, GSK has to file a preliminary consent solicitation statement with the U.S. Securities and Exchange Commission, and wait for the regulator's feedback before filing a definitive statement.
Such a move, which GSK had flagged as a possibility in a regulatory filing in early May, could send yet another signal to potential bidders of the seriousness of GSK's desire to buy Human Genome and make it harder for the U.S. company to find a white knight willing to take on the UK pharma giant.
Healthcare bankers say GSK has an advantage over rivals to buy Human Genome because the two have existing partnerships around key drugs.
The two companies together sell Benlysta, a new drug for the autoimmune condition known as lupus. They also collaborate on two other experimental drugs for diabetes and heart disease, currently in late-stage trials, that could become significant sellers. GSK owns the vast majority of the potential commercial gains associated with these drugs.
Shares of Human Genome were down about 0.2 percent at $13.53 in Nasdaq trading on Tuesday, slightly above GSK's offer. (Reporting by Soyoung Kim and Paritosh Bansal in New York; Editing by Bernard Orr)