Employees at Wellcome `kept in dark over jobs'
Confusion was also rampant in the City, where analysts were suggesting an enormous spread of potential cost savings from a merger of the two companies' operations. Estimates ranged from £400m a year to £1bn.
Dr Salvador Moncada, head of research and development at Beckenham, said: "We have not heard a word from anybody. You can imagine how uncertain the situation is here."
The 500 staff working under him were "annoyed and frustrated. It is difficult for people to be kept in the dark, especially further down the organisation where they have relatively low salaries and high mortgages."
Even the most modest estimates of cost savings suggest that £200m could be cut from Glaxo/ Wellcome's combined research and development spend of £1.3bn. The axe is expected to fall most heavily at Beckenham, with key staff retained to work at Glaxo's state-of-the-art £700m facility in Stevenage, Herts. A further £200m might be cut from sales, marketing and administration.
A spokesman for MSF, the largest staff union at both companies, was also critical of the companies' lack of communication with staff. "There has been no progress at all. We are trying to get in touch with both companies. Employees have not been brought up to date and are as much in the dark as ever."
Glaxo staff received an internal memorandum on Monday morning informing them of the deal, but apart from general comments on efficiences at the combined group it made no reference to possible redundancies.
One analyst said it was a fair bet that Glaxo had little idea how much might be saved. The uncertainty made it difficult to guage how full a price Glaxo's £10.25-a-share offer represented. It is estimated that cost savings of about £70m would be requiredto make the deal earnings-enhancing for Glaxo.
When SmithKline Beecham was formed six years ago, cost savings of £200m were made from a £4bn cost base without attacking the company's research and development spend.
The attraction of the offer to the Wellcome Trust, whose agreement to sell its remaining 39.5 per cent stake in Wellcome precipitated the bid, became apparent with estimates that the deal could add £170m a year to the amount it makes available for medical research.
Adding together the income from the cash element of Glaxo's offer with the dividends from the shares being offered, Wellcome's income from its stake would rise from just under £100m a year to £271m.
The Wellcome Trust would become one of Britain's biggest market investors following a takeover, with about £6.5bn under management.
A spokesman for the Association of the British Pharmaceutical Industry said the deal would give an enormous impetus to pharmaceutical research in Britain, which already accounts for a third of all industrial R&D in the UK. The drugs industry is Britain'ssecond-largest manufacturing exporter, employing 80,000 directly and 250,000 in related industries.
It emerged that advisers to Glaxo and the Wellcome Trust had been discussing a possible sale of the key 40 per cent stake for several weeks. The deal is still dependent on the trust securing High Court approval to reduce its stake below 25 per cent.
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