Here's more merger news:
Morale: SmithKline in rallying cry after
collapse of merger
MONDAY MARCH 2 1998
By Daniel Green
Jan Leschly, chief executive of
SmithKline Beecham, the UK drugs
group, plans a rallying call in Palm
Springs, California, next week to his
top 400 executives following the
collapse of the planned merger with
rival Glaxo Wellcome.
The management conference was
planned before merger talks with
Glaxo were announced a month
ago. It will now be used to send a
morale- boosting message to the
company's 50,000 employees.
Merger talks between the two companies failed last week after Mr Leschly
and Sir Richard Sykes, Glaxo's chairman, failed to agree on the balance of
power at the top of the merged company.
The two had previously agreed to share power evenly, although Glaxo is
about half as big again as SmithKline. But on February 20, Sir Richard said he
should run the merged company with Jean-Pierre Garnier, SmithKline's chief
operating officer, as his number two. That would have meant Mr Leschly's
immediate resignation, an option rejected by the SmithKline board.
Over the next few days, Sir Richard and Mr Leschly plan to canvass
institutional shareholders about the choices for their companies.
Glaxo has not yet taken a decision on whether to launch a hostile bid, but
SmithKline is already preparing a defence team for that eventuality.
SmithKline is also considering how to revive plans to raise money to help pay
for its research and development. Those plans were shelved when it began
merger talks with US rival American Home Products in January. SmithKline
abandoned those talks after Glaxo offered a merger.
Shares in Glaxo and SmithKline are likely to move sharply this week as the
market's perception of whether a bid is likely changes. Glaxo closed on Friday
down 57p at 1700p and SmithKline up 12p at 760p.
The Palm Springs meeting had split the companies, even as the merger
planning was going ahead. Some wanted the conference postponed because
many of the attendees would change - or lose - their jobs as a result of the
merger. |
