SmithKline cool on Novartis tie-up

SMITHKLINE BEECHAM yesterday played down suggestions that it is seeking a pounds 110bn merger with Novartis, the Swiss pharmaceutical group.

The company declined to comment on reports at the weekend that top executives from the two companies have met for "preliminary talks" but have yet to agree terms.

A SmithKline spokesman said: "We are a strong independent company. We don't need a merger."

The reports suggested that an outline discussion would value SmithKline at pounds 11.50 a share compared to the current share price of pounds 8.37. A special dividend payment to shareholders was also suggested.

One suggested rationale behind the deal was that it could prevent a counter-offer from Glaxo-Wellcome, the UK drugs group whose merger talks with SmithKline collapsed in acrimonious circumstances last year.

Glaxo is still thought to be keen on a deal with SmithKline, with industry experts suggesting that the retirement of Jan Leschly, SmithKline's chief executive next year, could trigger a fresh move by Glaxo's chairman, Sir Richard Sykes.

Novartis was formed in 1996 following the merger of two Swiss companies Sandoz and Ciba Geigy in a deal value at pounds 65bn.

Recent comments from Mr Leschly suggest he is happy with the way that SmithKline is trading and feels no pressing need for a major deal.