Glaxo on course to take over Wellcome

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The Independent Online
Glaxo and Wellcome shrugged off separate negative developments in their £9bn bid battle yesterday, as both parties waited for the result of the European Commission's inquiry into the takeover.

The EC concludes its investigation into the bid today. Because a combined Glaxo/Wellcome would have only 6 per cent of the European market the probe is thought to have been triggered solely because of its size and not competition issues but neither side is ruling out the possibility of a referral.

Analysts said a challenge launched yesterday to Glaxo's UK patent for Zantac , its best-selling ulcer treatment, was relatively unimportant with only 9 per cent of the drug's sales in Britain. Generics (UK), a group of pharmaceutical companies making non patent-protected drugs, said yesterday it had instituted proceedings in the Patents Court to revoke Glaxo's protection for Zantac, which is due to expire in 2001.

Generics said the patent was invalid on grounds of "novelty, obviousness, incomplete specification and lack of invention". A successful challenge would open up the market to other producers to compete with Zantac.

Glaxo remains confident that an investigation by the US Federal Trade Commission into overlaps in the companies' research into migraine and colorectal cancer treatments would not hold back the bid.

In theory the FTC has 20 days from the receipt of new information from Glaxo to reach its conclusions. In practice Wellcome continues to treat 8 March as its deadline to find a white knight. The Wellcome Trust, Wellcome's largest shareholder, will sell out to Glaxo next Wednesday in the absence of a better bid. Glaxo's shares closed yesterday 4.5p higher at 633.5p, valuing its offer at 1,033, 22p higher than Wellcome's share price, indicating the market's scepticism that a higher offer will be found.

Wellcome confirmed that the corporate finance team from Barings would be continuing to work at its London headquarters despite the collapse of the bank.