GSK Sinks as It Agrees to Buy Tesaro for Around $4 Billion

Shares of GlaxoSmithKline were down nearly 8% on Monday after the British company announced that it has agreed to buy Tesaro, a cancer specialist company for $4.16 billion.

New CEO of GSK, Emma Walmsley said to reporters, “This is an example of us executing on what we said we were going to do … to bring growth, pipeline, commercial capability and near-term catalysts.” She also said, “We still will be open to other potential bolt-ons in business development.”

“The acquisition of TESARO will strengthen our pharmaceuticals business by accelerating the build of our oncology pipeline and commercial footprint, along with providing access to new scientific capabilities,” Walmsley added.

The company said to the Business Journal, “This transaction is not about synergies.” It added, “Tesaro will operate as a GlaxoSmithKline unit in Boston and serve as a GlaxoSmithKline R&D site in the region. One of the benefits of the transaction is Tesaro’s Boston-base, which has integrated R&D and commercial capabilities, and gives GlaxoSmithKline access to talent in the area, enhancing connectivity with the thriving Boston scientific and biotech community.”

According to GSK, the acquisition of Tesaro would help it gain a foothold in ovarian cancer treatment with Tesaro’s so-called PARP (poly ADP ribose polymerase) inhibitor Zejula. Zejula can potentially kill cancer by stopping the body’s enzyme from repairing damaged DNA.

GSK said it will pay $75 a share in cash for the company, representing a 61% premium over last Friday’s closing price. The company said it is also taking on Tesaro’s debt.

Disclaimer: We have no position in GlaxoSmithKline plc (NYSE: GSK) nor Tesaro Inc. (NASDAQ: TSRO) and have not been compensated for this article.