Glaxo, Smithkline sign 187 bn mega merger

LONDON, JANUARY 17: Glaxo Wellcome Plc and SmithKline Beecham Plc said on Monday they had agreed to merge to form the world's biggest phar...

LONDON, JANUARY 17: Glaxo Wellcome Plc and SmithKline Beecham Plc said on Monday they had agreed to merge to form the world8217;s biggest pharmaceuticals group worth 114 billion pounds 187.2 billion or Rs 8,14,507 crore. The two British companies 8211; which tried and failed to merge two years ago 8211; said Glaxo shareholders would own 58.75 per cent and SmithKline investors 41.25 per cent of the group.

The new company, to be known as Glaxo SmithKline, will be headed by Jean-Pierre Garnier, currently number two at SmithKline, who takes the role of chief executive while Glaxo head Richard Sykes is to be non-executive chairman.

Based on Friday8217;s close, Glaxo was capitalised at around 66 billion pounds and SmithKline at about 48 billion. The merger comes at a time of rapid consolidation in the still fragmented pharmaceutical industry as companies seek to spread the mounting costs of finding, developing and marketing new medicines.

Shares in both companies rose strongly on Friday following news of merger talks asinvestors relished the prospect of a deal that would strip out costs and boost the combined group8217;s research and sales clout. In terms of market value, the new combination will compete with BP Amoco Plc currently worth around 108 billion pounds, for the position of Britain8217;s largest company.

The planned merger will bring together mainly complementary product lines, including treatments for major diseases such as asthma, diabetes, AIDS and depression. In February 1998, a planned merger between Glaxo and SmithKline foundered because of a clash between Glaxo executive chairman Richard Sykes and SmithKline chief executive Jan Leschly over who would run the group.

Since then Leschly has announced plans to retire in April 2000, while Sykes is contemplating a role in academia after he reaches the age of 60 in 2002. The merger comes at a time of rapid consolidation in the still fragmented pharmaceutical industry as companies seek to spread the mounting costs of finding, developing and marketing new medicines.Pharmacia amp; Upjohn Inc and Monsanto Co recently announced merger plans while Pfizer Inc is attempting to take over Warner-Lambert Co.

Merger to create Rs 1,388 cr giant in India
MUMBAI: The proposed global merger of British giants Glaxo Wellcome and SmithKline Beecham SB would create a Rs 1,388 crore drugs megacorp as per financials for the year ended December 1998 in India. The combine will have a market share of 7.38 per cent as per ORG data of November 1999, cementing its leadership position in India. The new company will further widen the gap with its nearest rivals Cipla and Ranbaxy.

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SmithKline operates through three companies 8211; SmithKline Beecham Pharmaceuticals SB Pharma and Smithkline Beecham Consumer Healthcare SBCH both 40 per cent subsidiaries and SmithKline Beecham Asia Ltd a 100 per cent arm 8211; in India. Glaxo India is yet to go through with a legal merger with Burroughs Wellcome, though the two companies both 51 per cent owned by the parent are already workingtogether on the operational front.

SB Consumer Healthcare, known for popular health drink brands Horlicks and Boost, is likely to function on a stand-alone basis, without actually being part of the overall merger plans in India.

Analysts say that the global merger plans could actually force Glaxo to hasten the merger process with Burroughs Wellcome, even as speculation is rife that partner SmithKline Beecham would consider raising its stake to 51 or more in the Indian arms, before tying the knot. The proposed marriage, analysts say, is a near perfect fit in terms of product portfolios, with minimal areas of overlap and large therapeutic coverage.