Wellcome gives up quest to improve on Glaxo bid

March 08, 1995|By New York Times News Service

LONDON -- Wellcome PLC said yesterday that it had given up its six-week hunt for another bidder and that it would accept the $15 billion takeover offer made in January by Glaxo PLC, creating the world's largest pharmaceutical company.

Glaxo won its battle for Wellcome after Wellcome's effort to find another buyer ended in failure over the last two days. After moving to the brink of offering to top Glaxo's bid, two potential suitors, Zeneca Group of Britain and Roche Holdings of Switzerland, backed off at the last moment, industry executives said.

The merger will be the second-largest in any industry, behind the $30 billion merger between R. J. Reynolds and Nabisco in 1989.

The deal will bring together two British companies that both face problems with their biggest products. Glaxo is hoping the merger will help it offset declining sales of its biggest-selling product, the anti-ulcer drug Zantac, which will lose its patent protection over the next few years.

Similarly, Wellcome will lose patent protection on its biggest-selling drug, the herpes medication Zovirax, and it has seen sales of its AIDS-fighting drug, known as AZT, or Retrovir, decline over the last year as well.

The deal will give the combined British companies, to be known as Glaxo Wellcome, greater economies of scale, especially in the expensive process of developing new drugs, at a time when the pharmaceutical industry is under intense pressure to keep prices down.

Together, the companies would have $12.2 billion in worldwide sales. Their combined worldwide market share would be 5.3 percent, putting them well ahead of the current leader, Merck & Co., which has a 3.9 percent share.

Wellcome chairman John Robb said he had come "tantalizingly close" to generating a better offer from another drug company, which industry executives identified as Zeneca, the pharmaceuticals business spun off two years ago from Britain's Imperial Chemical Industries PLC. Zeneca declined to comment.

But Zeneca decided not to bid after determining that Wellcome's largest shareholder, the Wellcome Trust, a charity, would not support the deal on the terms Zeneca was demanding.

Glaxo has offered cash and stock amounting to 10.44 pounds for each Wellcome share, or about $16.92 a share at current exchange rates.

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