Glaxo Wellcome and SmithKline Beecham will this morning announce their intention to form the world's biggest drugs company with a market capitalisation of $188 billion.
The new group will have its headquarters in London but will be largely run from a new US operational base, possibly in New York.
Glaxo SmithKline, as the company will be called, plans annual cost savings of about €1.1 billion to be realised after three years.
It will have sales of €17 billion and a global workforce of 105,000. But about 10 per cent of these will go as most savings will come from cuts in middle management and administrative functions, particularly in the UK and the US.
There are some overlaps, but regulators are unlikely to derail the deal on competition grounds. It is not clear, however, how the UK government will view the decision to run the company largely from the US. This is the current practice at SB but not at Glaxo. The deal comes after a period of unprecedented consolidation in the industry.
Jean-Pierre Garnier of SB will be chief executive, with Glaxo's Sir Richard Sykes as non-executive chairman. The other two main board members are Glaxo's John Coombe, finance director, and SB's Tachi Yamada, head of research and development.
