Essays on Glaxo SmithKline Merger Case Study

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The paper "Glaxo SmithKline Merger" is a great example of a case study on business  The merger of Glaxo Wellcome plc and SmithKline Beecham Plc became the most talked-about the merger of its time. All the business papers and journals carried their anticipatory articles regarding the merger. On July 5, 2000, when a joint letter was issued to the shareholders by Sir Richard Sykes (Chairman, GW) and Sir Peter Walters (chairman SB) announced their proposal of merger and said that it would help bring down the cost by 1 bn GBP by 2003.

Out of this saving, 250 mn GBP were supposed to be reinvested for research and development. (The Pharmaceutical Journal, 2000) August 21 was set as the date, subject to approval by the shareholders and American Federal Trade Commission. The talk of a merger had started three years before also but it failed due to a clash of egos between Glaxo chief executive Sir Richard Sykes and chief executive of SmithKline Jan Leschly. In 1998, the merger was virtually complete with Glaxo holding 59.5 % leaving 40.5 % to SmithKline shareholders.

Jan Leschly was slated to be the chief executive of the new group who was presently the CEO of SB. Sir Richard Sykes, the current CEO of Glaxo, was supposed to be the new chairperson. These negotiations went on for weeks and then it was suddenly called off. Glaxo said that it did not agree to the terms of the merger and SB said that they did not agree on the choice of the head of the new company. This was not refuted by Glaxo officials. The pharmaceutical industry knew that both the heads had worked together in the past and had a rivalry among the two.

Their management styles also clashed. These differences look personal but it pushed off the merger and caused a drop in the share prices and made a dent of $100 million according to The Economist. Although personal differences of the heads delayed the merger the financial need for increasing funds allocation for R & D for new drugs was the main reason for SB to look forward to the merger and also tried it unsuccessfully with two other companies.

In Mid -1999 the talks of a merger with Glaxo were restarted when Jan Leschly announced his retirement. This was indeed a major barrier that was thus removed.

References

Oliver Morgan,Sunday July 21, 2002,The Observer

The Pharmaceutical Journal Vol 265 No 7106 p123 ,July 22, 2000 Business

The Observer, Sunday July 21, 2002

Bbc news Monday, 18 December, 2000, 11:25

http://education.guardian.co.uk/businessofresearch/story/0,9860,759741,00.html

Dr Peter J Machin, GSK, Harlow, Essex, Maintaing and growing business through the GSK merger,

Financial Times, December 03, 2003.GMT

Pharmaceutical Executive, May 1999, p. 37 .

Financial Times, May 01, 2003.

domain-b.com/companies

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