Wellcome Trust firmly committed to Glaxo

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The Independent Online
Relations deteriorated further last night between Wellcome and its largest shareholder, Wellcome Trust, when the charity stuck to its guns and signed an irrevocable undertaking to accept Glaxo's £9.2bn hostile bid.

The rebuff, conditional on no higher bid emerging, came despite an eleventh-hour attempt by Wellcome's financial adviser to secure a change of heart.

It is understood Barings, Wellcome's merchant bank, had a meeting on Thursday with Robert Fleming, the Wellcome Trust's advisers, to argue the case for the trust not to commit its 39.5 per cent stake.

The meeting lasted less than half an hour. "It was stiff and short," one insider said.

Yesterday the trust said the meeting had left Flemings' advice on Glaxo's offer unchanged. However, it was "encouraged" by Wellcome's moves to seek a higher offer from a white knight.

The action switches to the High Court next month where the trust will seek approval to reduce its stake below 25 per cent.

It also emerged that Wellcome's third possible defence - regulatory intervention - is almost certain to be decided, if anywhere, in Brussels rather than London. A spokesman for the European Commission's competition commissioner said the size of the proposed merger and the value of the two companies' sales suggested it should fall under Brussels scrutiny.

Meanwhile, Office of Fair Trading sources said a referral to the Monopolies and Mergers Commission was highly unlikely. "The feeling is the turnover involved means if there is a regulatory dimension it will be in Europe," one said.

Wellcome yesterday announced that its new anti-herpes drug, Valtrex, had been approved for use in the UK and Ireland, which it saw as strengthening its case that Glaxo is undervaluing the company The drug could achieve sales of £250m to £350m over the next three years, observers believe.

The company confirmed reports that seven of its directors could share £10m through share options and contract termination if the Glaxo bid succeeds. John Robb, chairman and chief executive, would receive £2.5m.

Wellcome's shares closed at 998p, up 12p. Glaxo shares gained 2p to close at 618p.

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