Smithkline, AHP in merger talks

LONDON, JAN 20: Smithkline Beecham today said the company was in merger talks with American Home Products (AHP) to create the world’s second largest drug company.

The company spokesman refused to comment in detail but said the merger, a marriage that if consummated, would create the world’s largest drug company.At current market prices, the merged company would have a market valuation of around 7.75 billion pounds, making it only marginally smaller than Johnson and Johnson. In response to market speculation about a merger, he said, “There can be no assurance that any such transaction will be agreed or as to what the terms of such transaction would be.” SmithKline Beecham is Britain’s second largest drugs group with a market value of nearly 38 billion pounds.

American Home Products is the third biggest group in the US behind Merck and Bristol Myers Squibb Co and is worth around $40 billion, and it has a history of continuing acquisitions. Analysts were still examining the potential synergies between the two companies but they said the most obvious overlap lies in vaccines, in which both the companies are world leaders. They also believe that American Home Products is keen to get its hands on Smithkline’s US pharmacy benefit manager unit diversified pharmaceutical services.