THE #9200m Glaxo bid for Wellcome is running into potential problems

after the US Federal Trade Commission asked both British companies for

more information under the stipulations of the Hart-Scott-Rodino Act.

It is believed that the FTC is concerned over the possible breaching

of anti-trust regulations with the products involved being for the

treatment of migraine with the 311C drug and Panorex which is used in

the case of colorectal cancer.

Glaxo said that it will co-operate fully with the FTC but that it is

not possible at present to say whether it will affect the timetable of

the offer with the first closing date of March 8.

It added that such requests for information are not uncommon in

transactions of this type and size.

However, it is unlikely to delay the offer going unconditional on that

date given that the Wellcome Foundation, with 40% of the pharmaceuticals

company, is already pledged to accept the Glaxo offer unless there is a

higher counter offer.

That may be complicated this morning after the Barings crisis.

Not only is the bank a co-adviser with Morgan Stanley to Wellcome but

any significant stock market reversal could affect the decisions of both

existing Wellcome shareholders and the thinking of any potential white

knight, particularly one armed with plenty of cash.

Wellcome chairman John Robb yesterday expressed his confidence in the

Barings team which has promised to continue to work fully in the

defence.

As there is no underwriting involved in the defence with no new shares

being issued, the parent bank's problems are not relevant.

It is understood that Mr Robb would be furious if it were to be

suggested that a successful Wellcome defence came about through the

actions of regulators in either the US or in Brussels where the EU

decision should be made known this week.

It is suggested that while there has been a silence in recent days,

talks may well be continuing with potential friendly bidders prepared to

put forward a higher offer. But that will probably not be announced

until very close to March 8 as it would throw away a tactical advantage

and also allow Glaxo to be given confidential information about

Wellcome's trading position which at present it lacks.

As the share price at 1011p is more or less in line with the value of

the Glaxo bid at 1029p, unless there is a counter-offer, Wellcome will

almost certainly fall into the hands of Glaxo chairman Sir Richard

Sykes.

Sir Richard Sykes