Court delays Glaxo's final move

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The Independent Online
Wellcome, the drugs firm under siege from Glaxo in a £9bn bid, yesterday gained an extra few days breathing space to continue its search for a white knight.

The tactical advantage emerged after the Wellcome Trust gained High Court clearance to sell to Glaxo its near 40 per cent stake in the company.

The court decision seals Wellcome's fate unless a counter-bidder emerges to top Glaxo's offer, or the US or European competition authorities object, which is thought unlikely.

The Glaxo camp has been dismissive about the possibility of a white knight because there has been no announcement of talks - which would be necessary as soon as contacts developed to a serious stage.

Wellcome sources insisted that far from turning the bid into a walkover, the court had breathed new life into the search for a white knight. The company is treading a fine line between making contacts and opening negotiations, which would prompt an announcement and force Wellcome to hand confidential documentation to Glaxo.

Wellcome did not oppose the trust's request for court permission to dispose of its shares - necessary because of the legal relationship between the trust and the company - but joined the action to loosen the terms of the sale between Glaxo and the trust. As a result, the court extended the date on which the trust's undertaking to sell becomes binding by eight days, from 28 February to 8 March.

This brings the key date in line with US takeover rules, under which the March date is the end of the formal offer period. The court also agreed to changes in the small print of the deal, making it easier for the trust to back out. The contract, under which the trust agreed to sell to Glaxo after 28 February, was claimed to be a deterrent to any counterbidder showing its hand after the formal offer period expired.

James Lupton of Wellcome's adviser, Barings, said "The trust will have better withdrawal rights if an improved offer comes later on, after 8 March."

Glaxo said "We are happy with the decision, and the ruling that the trust can sell all or part of its holding to Glaxo. Another condition of the offer has been met." Wellcome shares rose 5p to 1028p.