Article Abstract:
There has been a muted response from investors to the planned $284 billion merger of pharmaceutical companies Smithkline Beecham and Glaxo Wellcome. This is largely because of the imbalance between the two companies with regard to new products. Smithkline Beecham manufactures a number of drugs for which demand is expanding rapidly, while Glaxo Wellcome has few products under development. There is limited product overlap between the two companies, and there will thus be few opportunities for cost savings.
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Article Abstract:
There is much speculation that American Home Products (AHP) is seeking an alternative partner following the failure of its $72 billion bid for Warner Lambert. It is widely believed that the most suitable partner would be Novartis, which has made it clear that it wishes to increase its presence in the US. There are a number of factors that would complicate a merger between AHP and Novartis, but their product ranges are complementary and they are both seeking to expand into each other's markets. Novartis has relatively few options because of the market capitalization differential between the US and Europe in the pharmaceuticals sector.
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Article Abstract:
A bid for Wellcome by Glaxo offers opportunities for advisers such as Lazard Brothers, the only adviser for Glaxo. Wellcome's lead adviser is Baring Brothers, while Morgan Stanley will deal with issues linked to the US which emerge from this deal. There are other major bids in the UK which could also provide income for corporate financiers. These include a bid for Northern Electric by Trafalgar House, and the acquisition of Pet by Grand Metropolitan.
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