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The Federal Trade Commission gave Glaxo Wellcome PLC permission Monday to acquire SmithKline Beecham PLC after the firms agreed to divest six businesses to rival drug companies. Approval comes 11 months to the day after Glaxo and SmithKline announced their so-called merger of equals, which will leave Glaxo shareholders with 58.75 percent of the combined company and SmithKline shareholders with the remaining 41.25 percent. The British companies said Monday that they expect to close the deal Dec. 27. The U.K. High Court will hold a hearing Wednesday to formally sanction the deal. That is the last regulatory approval required. Based on their combined market capitalization of $176.4 billion as of Monday’s opening price, the acquisition of the SmithKline shares is valued at $72.765 billion. That represents a premium of about $360 million over SmithKline’s Monday morning market capitalization. The FTC agreement does not require the companies to unload any of their smoking cessation businesses, though the agency did reserve the right to later seek such a sale. Glaxo sells the prescription drug Zyban, while SmithKline sells the Nicoderm patch and Nicorette gum over-the-counter. “Glaxo Wellcome and SmithKline Beecham continue to believe that this area does not raise a competitive issue and accordingly continue to expect that no divestiture in the smoking cessation product area will be required in the future,” the companies said in a prepared statement. Glaxo and SmithKline agreed to sell the antiemetic drug Kytril to F. Hoffman-LaRoche, the U.S. marketing and distribution rights for the antibiotic ceftazidime to Abbott Laboratories and the worldwide rights to antiviral drugs Famvir and Denavir to Novartis Pharm AG. The companies also agreed to relinquish to Cantab Pharmaceuticals PLC all rights to Cantab’s DISC technology, which is used to develop a herpes vaccine. They will drop their trademark rights to Zantac in the United States and Canada so that Pfizer Inc.’s Zantac 75 can compete in the OTC H-2 blocker acid relief market. They also will give up intellectual property rights for a popoisomerase I inhibitor, assign IP rights for the irritable bowel syndrome drug frovatriptan to Vernalis Ltd. and give rights to another irritable bowel syndrome drug to Alizyme PLC. “The proposed divestitures will lead to continued competition in these critically important pharmaceutical markets,” said Richard Parker, director of the FTC’s competition bureau. “Perhaps as importantly, it ensures that competition occurs in the future in markets where pharmaceutical products are not currently available, but where existing development agreements will no doubt lead to treatments that will benefit U.S. consumers.” Copyright (c)2000 TDD, LLC. All rights reserved.

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