Buyouts Hopes Dim at Human Genome (HGSI)

November 30, 2009 · Filed Under Financial, Lupus, M&A, genomics 

Human Genome Sciences, Inc. (NASDAQ: HGSI) looks to be dwindling as a takeover candidate.  There have been rumors surrounding the name for months and months, yet the shelf filing for it to raise capital dampened that hope for at least many investors.  Today after the close came word that the company was selling up to 12.5 million shares.  At today’s prices this would raise over $300 million.

The offering indication and underwriters are covered more in-depth over at 24/7 Wall Street.   When you read through the use of proceeds, you will see a company that is rapidly trying to catch up to its growth potential.  It does not sound at all as though Human Genome Sciences is close to be acquired.

The company even noted that it may use a portion of funds for strategic investments, although it said it has no agreements or commitments for an acquisition nor an investment.

HGSI shares rose 2.6% to $27.82 today and the stock is down 4.7% close to $26.50 in the after-hours session.  This was a penny stock before it made its exponential rise earlier in the year.

The 52-week trading range is $0.45 to $29.48 and its market cap is listed as over $4.5 billion.  Being a large drug company and buying this one out even after it hit $10.00 might have been more than difficult of a sell to holders.  Imagine trying to explain that now you wanted to acquire a company with great prospects in lupus and in genomics, but you wanted to pay over $5 billion (in theoretical price premium) after a stock has risen about 5,000%.

It seems that short sellers hold little fear of this being acquired as well.  The mid-November short interest data showed that over 17.5 million shares were held short.

JON C. OGG

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