UK drugs giants Glaxo Wellcome and SmithKline Beecham are expected to announce a merger into the world's largest pharmaceutical group later on Monday.

The deal could create Britain's largest company valued at £130bn.

The boards of both companies are reported to have met on Sunday to approve the deal.

Presentations to investors in London and New York have been scheduled for Monday, some reports said.

The agreement would lead to annual cost savings of some £500m, but could result in the loss of as many as 15,000 jobs from a global workforce of 110,000.

The Manufacturing Science and Finance Union has asked for a meeting with company chief executives and Trade and Industry Minister Lord Sainsbury on 26 February to discuss the likely impact on jobs.

Glaxo gets lion's share

The all-share merger is expected to give Glaxo about 58% of the new company, but SmithKline is reported to be pushing for better terms to reflect the growth prospects of its diabetes wonder drug, Avandia.

The merged group will bring together a host of top drugs for aids, diabetes and asthma as well as more traditional products such as Lucozade and Ribena.

Some sources are reporting that the non-prescription brands will be sold off.

The latest talks, continuing in London, mark the second time the two firms have discussed a merger.

Two years ago talks failed after a reported clash of egos between Glaxo chief executive Sir Richard Sykes and his counterpart Jan Leschly.

This time, Mr Sykes is expected to remain chairman only briefly before he retires, with Mr Leschly's number two, Jean-Pierre Garnier, becoming chief executive.

Rumours of a second round of talks have abounded since late last year when Mr Leschly announced his intention to step down in April.

Rumours confirmed

On Friday, rumours forced the two companies to confirm they were discussing a merger, but many thought the talks were still at an early stage.

Friday's Financial Times said the talks were progressing smoothly and were "on track to be successfully concluded".

Firms under pressure

Drugs firms worldwide are under pressure in the face of rising costs as the search for new medicines becomes more complex.

The talks between Glaxo and SmithKline come amid unprecedented consolidation in the drug industry and follows recently announced merger plans between Pharmacia & Upjohn and Monsanto and Pfizer's attempt to take over Warner-Lambert.

The link-up of Glaxo and SmithKline would create the world's biggest producer of prescription drugs with sales of £17bn and a market share of about 7.4%.

Merck is currently the world's largest prescription drugmaker, with a market share of 4.2%, with AstraZeneca and Glaxo Wellcome close behind.

These will soon to be overtaken by the merger of Pfizer and Warner-Lambert, who together will have a market share of 6.3%.