The bid will be the biggest launched on the stock market in Britain if it succeeds, though it is smaller than the failed £14bn bid for BAT in 1989.
It will create a £28bn drugs group worth more on the stock market than British Telecom, with a powerful position in Aids therapy, ulcer and migraine treatment, the anti-viral drugs in which Wellcome has a strong position, and antibiotics. Sir Richard said the bid was a response to changes in the international drugs industry, which was consolidating with a series of mergers as the balance of power had shifted towards customers from producers.
With health budgets under pressure around the world, the health services, hospital managements and insurance companies that buy drugs are demanding cheaper deals. In the US, which accounts for more than 40 per cent of the two companies' sales, a new breed of specialist purchasing company has succeeded in cutting drug costs.
The offer brought a frosty response from Wellcome, which refused to say last night whether it would accept. But Wellcome's board is in a dilemma because its largest shareholder, the charitable Wellcome Trust, gave a conditional acceptance to the bid lateon Sunday night.
The bid marks a return to the 1980s' takeover frenzy and comes on the same day as confirmation that Cadbury is to pay £1bn for Dr Pepper, the American drinks group, and days after Grand Metropolitan agreed to spend £1.7bn to take control of Pet Inc, a USfood group.Reuse content