Glaxo Interim Profits Up 10% On 2% Sales Rise

Earlier than expected, and along with issuing its final offer documents for Wellcome on February 7, Glaxo announced its interim results for the six months ended December 1994, which showed a 10% improvement in pretax profits at L1.097 billion ($1.75 billion), on sales which were 2% higher at L2.85 billion ($4.55). Earnings per share were up 4% at 24.3 pence and earnings per American Depository Receipts were 76 cents, a 9% rise (which was the result of the dollar's weakness). The dividend increases 11% to 10 pence per share.

Glaxo's L8.9 billion offer for Wellcome (Marketletters passim) is L711 in cash and 47 New Glaxo Ordinary Shares for every 100 Wellcome Ordinary shares or ADRs. It is a premium of 52% over the Wellcome share price on the day before the final offer was announced (January 23), and a profit/earnings multiple of 22.5 times Wellcome's historical earnings per share (including exceptional items).

Results "Highlight Desire For Acquisition," Says Wellcome In response to the news, Wellcome pointed out that Glaxo's results contrast sharply with Wellcome's 13% sales increase and 18% rise in EPS (Marketletter February 6), and that Glaxo's EPS grew by less than 2%, excluding the non-operating exceptional profit on disposal.