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SmithKline chief retiring
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December 2, 1999: 11:10 a.m. ET
Early departure of Leschly renews talk of possible Glaxo tie; stock gains
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LONDON (CNNfn) - SmithKline Beecham chief executive Jan Leschly is stepping down early, the company announced Thursday, sparking hopes the drug firm will resuscitate its aborted merger with rival Glaxo Wellcome.
SmithKline stock jumped more than 4 percent Thursday in London to 878 pence, and Glaxo stock rose nearly 3 percent to 1,915 pence. Rumors of Leschly's early departure have abounded for almost a year, as he was seen as the major obstacle to a deal with Glaxo.
SmithKline confirmed Thursday Leschly will retire in April 2000, six months ahead of schedule, to be replaced by Jean-Pierre Garnier, the current chief operating officer.
"Leschly had to retire in September on his 60th birthday [in line with SmithKline's by-laws]," a spokesman confirmed, "but the logical time to step down is at the annual shareholders' meeting in April, and we're announcing it now to have a nice orderly succession."
Glaxo had no official comment on Leschly's early departure.
Others see more significance in the early departure, however. Glaxo and SmithKline attempted to forge a deal in February 1998, but talks foundered largely on the personal animosity between Leschly and Sir Richard Sykes, Glaxo's executive chairman. Sykes was widely reported to have demanded the removal of Leschly as part of the deal.
Hopes of further consolidation in the pharmaceutical sector have been raised by a number of recent deals. Warner-Lambert (WLA) is the subject of a tussle between Pfizer (PFE) and American Home Products (AHP), and earlier Thursday, Novartis and AstraZeneca (AZN) announced plans to merge and spin off their agrochemical activities.
A SmithKline-Glaxo combination would form a company with a market value of some 120 billion pounds ($192 billion). Such a company would leapfrog current industry leaders Novartis of Switzerland and Merck (MRK) of the United States to stand on level footing with the proposed Warner-Lambert/Pfizer company.
"The fit is good, the product portfolio is complementary," commented analyst Peter Cartwright of broker Williams de Broe, "although a Glaxo-SmithKline combination would be savage in terms of job cuts, and would face plenty of opposition [from unions and politicians]." 
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