FTC Clears Glaxo, SmithKline Merger
Glaxo Wellcome and SmithKline Beecham received conditional U.S. antitrust approval for their $73-billion merger on Monday, as the Federal Trade Commission deferred deciding whether the companies must sell off a quit-smoking product.
The FTC said it will decide within 30 days whether the companies must make additional concessions as a condition of becoming the world’s second-largest pharmaceutical company.
As part of a settlement announced Monday, Glaxo and SmithKline must sell off overlapping product rights in nine drug markets.
The accord would let GlaxoSmithKline focus on improving its research after several setbacks, the latest being the U.S. Food and Drug Administration’s rejection of SmithKline’s Factive antibiotic. The company will have strong positions in treatments for HIV and asthma.
The companies plan to complete the merger by Dec. 27, said SmithKline spokesman Alan Chandler. He said the FTC is unlikely to make the company sell any of its three main quit-smoking products.
SmithKline and Glaxo initially said the combination would be completed in August. The FTC forced two delays as it studied whether the new company would control the $850-million-plus quit-smoking market, raising company concerns that Glaxo’s Zyban and SmithKline’s Nicorette and Nicoderm would be sold.
Zyban, which had first-half sales of $69 million, is a version of Glaxo’s Wellbutrin antidepressant.
The companies agreed to sell off SmithKline’s Kytril, an anti-nausea drug used after chemotherapy, to a unit of Roche Holding and SmithKline’s antiviral drugs Famvir and Denavir to Novartis.
In addition, Pfizer will get the trademark rights to Glaxo’s over-the-counter Zantac 75 acid-relief drug, which competes with SmithKline’s Tagamet in a $500-million U.S. market. Pfizer already markets Zantac in the U.S.
FTC spokesman Mitch Katz said the agency arranged the unusual conditional approval so the companies could meet European deadlines.
Glaxo Wellcome’s American depositary receipts closed off 81 cents at $56.31, while SmithKline’s ADRs fell 44 cents to close at $64, both on the New York Stock Exchange.
