THE #9200m Glaxo bid for Wellcome is running into potential problems
after the US Federal Trade Commission asked both British companies for
more information under the stipulations of the Hart-Scott-Rodino Act.
It is believed that the FTC is concerned over the possible breaching
of anti-trust regulations with the products involved being for the
treatment of migraine with the 311C drug and Panorex which is used in
the case of colorectal cancer.
Glaxo said that it will co-operate fully with the FTC but that it is
not possible at present to say whether it will affect the timetable of
the offer with the first closing date of March 8.
It added that such requests for information are not uncommon in
transactions of this type and size.
However, it is unlikely to delay the offer going unconditional on that
date given that the Wellcome Foundation, with 40% of the pharmaceuticals
company, is already pledged to accept the Glaxo offer unless there is a
higher counter offer.
That may be complicated this morning after the Barings crisis.
Not only is the bank a co-adviser with Morgan Stanley to Wellcome but
any significant stock market reversal could affect the decisions of both
existing Wellcome shareholders and the thinking of any potential white
knight, particularly one armed with plenty of cash.
Wellcome chairman John Robb yesterday expressed his confidence in the
Barings team which has promised to continue to work fully in the
defence.
As there is no underwriting involved in the defence with no new shares
being issued, the parent bank's problems are not relevant.
It is understood that Mr Robb would be furious if it were to be
suggested that a successful Wellcome defence came about through the
actions of regulators in either the US or in Brussels where the EU
decision should be made known this week.
It is suggested that while there has been a silence in recent days,
talks may well be continuing with potential friendly bidders prepared to
put forward a higher offer. But that will probably not be announced
until very close to March 8 as it would throw away a tactical advantage
and also allow Glaxo to be given confidential information about
Wellcome's trading position which at present it lacks.
As the share price at 1011p is more or less in line with the value of
the Glaxo bid at 1029p, unless there is a counter-offer, Wellcome will
almost certainly fall into the hands of Glaxo chairman Sir Richard
Sykes.
Sir Richard Sykes
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