The transaction values HGS at approximately $3.6bn on an equity basis, or approximately $3bn net of cash and debt, and represents a premium of 99% to the HGS closing price of $7.17 per share on 18 April 2012.
GSK chief executive officer Andrew Witty said the transaction meets the company’s financial criteria for acquisitions and is expected to deliver significant returns over the long-term.
"This is a natural next step in our nearly 20-year relationship with HGS, and we look forward to working with HGS to integrate our businesses and to realizing the full value of BENLYSTA, albiglutide, and darapladib for the benefit of patients and our shareholders," Witty added.
GSK will acquire full ownership of BENLYSTA, albiglutide and darapladib by which the company expects to simplify and optimize R&D, commercial and manufacturing operations.
At least $200m in cost synergies could be fully realized by 2015, subject to appropriate consultation, and the transaction will be accretive to core earnings beginning in 2013, according to GSK.
HGS president and chief executive officer Thomas Watkins said, "HGS has had a long and productive working relationship with GSK, and together we will be uniquely positioned to achieve the full potential of BENLYSTA and other products in our pipeline for the benefit of those battling serious disease around the world."
Lazard and Morgan Stanley are GSK’s financial advisors while Cleary Gottlieb Steen & Hamilton and Wachtell, Lipton, Rosen & Katz are providing legal advice to the company.
Goldman, Sachs & Co. and Credit Suisse Securities are acting as HGS’s financial advisors and Skadden, Arps, Slate, Meagher & Flom and DLA Piper LLP (US) are serving as legal counsel.