Do Wellcome Results Justify Higher Bid

With 1994 sales up an underlying 13%, pretax profits 19% higher and operating margins at 31.5%, "these record-breaking results show in very clear terms the strength of Wellcome's business and prospects," says the group's chairman and chief executive, John Robb, commenting on the unaudited preliminary figures for last year. These have been released early in order to provide evidence that the company's performance is better than that indicated by Glaxo's offer for the company (see page 3 and Marketletter Janaury 30).

However, analysts approached by the Marketletter said the results are below or in line with their forecasts, which means that Glaxo's valuation of Wellcome is probably about right. However, as one analyst noted, this is the first time the results have had a December year-end, so it has been more difficult to forecast. He added that Glaxo itself could come up with a good set of numbers.

And Glaxo has said the "results are of little surprise." It adds that its final offer represents a premium of around 47% to the Wellcome share price on the day prior to the announcment.