Glaxo Bids L8.9 Billion To Take Over Wellcome

In a departure from its organic growth philosophy, Glaxo is bidding to take over fellow UK drugmaker Wellcome for a final offer of L8.9 billion ($13.9 billion) based on an agreement with the Wellcome Trust, which is conditional to High Court approval, to accept the offer in relation to its 39.5% stake in the company. The offer is L722 in cash and 47 New Glaxo Shares for every 100 Wellcome shares, based on the Wellcome share price of 688 pence on January 20, the last dealing day before the announcement. As the news of the deal broke, Wellcome's share price soared 275 points to 963 pence. Glaxo's share price fell 48 points to 595 pence.

If the bid is successful, it will be the biggest takeover in the history of British industry, and will give Glaxo a 5.3% stake in the world drugs market, positioning it first ahead of US competitor Merck & Co, which has a market share of around 3.9%.

If the bid goes ahead it will seriously alter Glaxo's position from being L2 billion cash rich to a debt of L6.4 billion through corporate loans to finance the acquisition. The loan, which is understood to have been raised through deals with a number of banks, is the biggest to have been secured in the UK.