A merger which would have created the world's largest pharmaceutical company has been called off.

It follows the collapse of talks between SmithKline Beecham and Glaxo Wellcome.

Unions feared job losses

If the two had joined forces they would have also have become the second biggest firm of any kind, after General Electric.

But discussions were terminated on Monday evening with Smithkline citing "insurmountable differences."

In its announcement, the company said the negotiations began falling apart on Friday after Glaxo sought to change terms of the tentative deal announced on January 30.

That created the differences that left the two British drug makers unable to agree terms, SmithKline said.

The company added that the discussions since Friday had "revealed a number of differences between the companies, including differences in the approach to the possible merger, management philosophy and corporate culture."

SmithKline said its board had unanimously decided against recommending the merger to shareholders.

Glaxo said the firms were unable to "achieve conclusions to the discussions." The company said it would not be looking for an alternative merger partner.

The cancellation of the merger could send share prices of the two companies tumbling on the financial markets, although their employees are likely to be relieved as there would have been thousands of job losses.

Many analysts had considered the merger a fait accompli because all major issues appeared to have been resolved.

The original plan decided senior management positions, gave Glaxo a majority 59.5% share and left the merged company in Britain.

The two companies had viewed merging as a way to boost their research and development budgets.

When the proposed merger was first revealed the stocks of both companies surged in price. SmithKline had a market value of about $70 billion (£43 billion) and Glaxo Wellcome $96 billion (£57 billion) before the talks were announced.
 

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