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'High-priced Poker Game'

GlaxoSmithKline has made a $2.6 billion unsolicited offer to take over Human Genome Sciences, reports Brett Chase at Miyanville. But not only has Human Genome rejected Glaxo's offer, it put itself up for sale to the highest bidder, saying Glaxo's offer of $13 a share is too low and doesn't reflect the potential value of the company.

"This potential marriage has been speculated for years," Chase says. "The two companies have significant stakes in each other. Glaxo co-developed the lupus drug Benlysta, which was approved last year. The companies are in the late stages of developing a drug for heart disease (darapladib) and a diabetes treatment (albiglutide)."

Analysts tell Chase that in the end, Glaxo will probably buy Human Genome, but that the bidding war will drive the price higher. "If anything, it's a high-priced poker game," Chase says. "Expect Glaxo to win."