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Glaxo, SmithKline seal deal
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December 18, 2000: 6:56 a.m. ET
U.K. pharma firms gain final U.S. approval for $67B merger
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LONDON (CNNfn) - Glaxo Wellcome PLC and U.K. rival SmithKline Beecham PLC are set to complete their £46 billion ($67 billion) merger after clearing the last regulatory hurdle Monday.
The new firm, GlaxoSmithKline PLC, will be one of the world's top three pharmaceutical companies after its official birth on Dec. 27. The partners said Monday the U.S. Federal Trade Commission of the United States gave its long-awaited approval for the deal.
Completion of the deal, first announced on Jan. 17, 2000, has been subject  to delays as the firms wrangled with regulators on both sides of the Atlantic as to the combined entity's potential for monopoly control of certain pharmaceutical areas.
The European Union gave its approval in May, and since then Glaxo and SmithKline have agreed to divest several products to appease the U.S. competition watchdog.
Investors were unenthusiastic, however, pushing Glaxo (GLXO) stock down more than 3 percent to 1,883 pence, while SmithKline (SB-) slid a similar amount to 853 pence.
The tie-up brings an end to a saga that started as long ago as 1998, when the firms first held talks about joining forces. Animosity between their CEOs put paid to the first round of discussions, but the prospect of forming an industry leader proved too tempting for the companies, and talks restarted in late 1999.
The merger was valued at £46 billion ($67 billion) when it was unveiled in January 2000.
Glaxo investors will own 58.75 percent of the combined company, swapping their shares on a 1-for-1 basis for stock in GlaxoSmithKline. The smaller company's shareholders will get 41.25 percent of the new entity, receiving 0.4552 of a GSK share for each of their SmithKline shares.
GlaxoSmithKline will rate virtually on a par with Pfizer Inc. (PFE: Research, Estimates) for the second slot in the rankings of global pharmaceutical companies by revenue, behind industry leader Merck Inc. (MRK: Research, Estimates).
The formal recognition of the merger will take place in the U.K. High Court on Dec. 20.
The new firm will sell two anti-viral treatments and an anti-emetic drug as a condition of the FTC's approval for the deal, and the FTC said it would continue to monitor the market for smoking cessation treatments to ensure there were no competition abuses. The firms said in a statement they "continue to believe that this area does not raise a competitive issue, and accordingly continue to expect that no divestiture...will be required." 
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Glaxo Wellcome
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