MPs criticise failure of drug merger
Drugs link: SmithKline and Glaxo are ticked off, but a committee report says they should merge
Wednesday 17 June 1998
In addition, the House of Commons Science and Technology Select Committee has signalled its support for any future tie-up between the two drug company giants.
The stock market has been awash with rumours that merger talks are again on the agenda. The companies have either denied the moves or refused to comment on them.
The committee, chaired by Dr Alan Williams, initially decided to examine the planned merger as it feared that the UK's research and development base would be damaged. Ironically, it concluded that a merger would have been a good thing, creating a national champion that would actually help secure domestic jobs and expertise.
But the committee's report is critical of the manner in which the talks broke down. It says: "The judgement of senior executives must be called into question. They readily embarked on an adventure with national assets, and then equally readily abandoned the enterprise less than a month later without a clear cause consistent with claimed advantages."
It believes that neither Glaxo's executive chairman, Sir Richard Sykes, nor SmithKline's chief executive, Jan Leschly, has been properly called to account for the merger failure.
The committee said the two men gave contradictory reasons why the talks broke down, but it remained unconvinced that management styles and philosophies were so different as to be irreconcilable.
Glaxo hit out at the report, saying its conclusions were "surprising" and "disappointing", but SmithKline was broadly supportive. It said: "We endorse the position taken by the committee in stating that it was better for both companies to remain separate than for the merger to have proceeded without producing the desired returns." It repeated its view that Glaxo broke the fundamental principle that it was a merger of equals.
While speculation has mounted that talks might soon begin again, Glaxo sources say the company would only proceed if Mr Leschly is removed.
Mr Leschly told a seminar organised by London's City University Business School that he was "appalled" at speculation that he would resign over the failed merger under pressure from shareholders.
"I have no intention of resigning and I am appalled at these rumours. I have tried very hard to maximise shareholder value. Why should I consider resigning?"
Outlook, page 19
International Women's Day 2014: The shocking statistics that show why it is still so important
Feminist quotes to inspire you on the International Women's Day
Oscar Pistorius trial first week: Never mind a media scrum – murder case becomes bizarre safari following the tracks of a wounded lion
International Women's Day 2014: Mothers and daughters around the world describe hopes and dreams in touching photographs
International Women’s Day: 'When a man gives his opinion, he's a man. When a woman gives her opinion, she's a bitch' - feminist quotes from female icons to inspire you
Apple's Tim Cook: Business isn’t just about making profit
Thousands of young people forced to go without food after benefits wrongly stopped under 'draconian' new sanctions regime
Ukraine crisis: New navy chief 'defects' and surrenders Crimean HQ as Putin claims ultranationalists forced intervention
Britain's top vet sparks controversy with call for ban on slashing animals' throats in 'ritual' slaughters for halal and kosher meat products
Ukraine crisis: Russia dismisses '3am ultimatum' as 'total nonsense'
If you're horrified by a flame-roasted dog, you should be shocked at a hog roast
- 1 To those who can’t see the point of International Women’s Day: you are the very reason it exists
- 2 International Women's Day 2014: The shocking statistics that show why it is still so important
- 3 Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
- 4 Too upsetting? Academy members voted for Oscar-winning 12 Years A Slave 'without watching it'
- 5 Liam Neeson turned down James Bond role because Natasha Richardson said she wouldn't marry him if he took it
iJobs Money & Business
£12000 per annum: Inspiring Interns: The company works with Tier 1 FTSE 100 Ba...
£32000 - £36000 per annum + generous benefits: Pro-Recruitment Group: * TAX * ...
£37000 - £40000 per annum + £20000 benefits package: Pro-Recruitment Group: **...
£30000 - £35000 per annum + generous benefits: Pro-Recruitment Group: Mixed Ta...