By Randall Osborne

Just when bells seemed about to ring in the proposed marriage of pharmaceutical giants Glaxo Wellcome plc and SmithKline Beecham plc, Glaxo — according to SmithKline — balked, the deal was off and both parties went home, leaving analysts to puzzle over what happened.

Except to investment bankers, the squelched merger is not much of an event, said Alex Zisson, an analyst with Hambrecht & Quist LLC, in New York.

"But it's rare for a company to point fingers that explicitly in a press release," Zisson said. "You have to think there's something to SmithKline's story."

Spokespersons for the London-based companies could not be reached Tuesday. Richard Koenig, spokesman for SmithKline at its U.S. headquarters in Philadelphia, had no comment. The prospective deal was valued at $65 billion to $75 billion and would have created the largest pharmaceutical group in the world.

SmithKline issued a statement late Monday, saying the pair had been "unable to agree on the terms" that apparently had been resolved two weeks earlier, including management of the new company and how its stock would be divided. (See BioWorld Today, Feb. 3, 1998, p. 1.)

"Glaxo has been unwilling to proceed in accordance with the agreed arrangements," SmithKline said.

On Jan. 30, both companies confirmed their ongoing talks. Less than a month later, those talks broke down. Last Friday, SmithKline said, Glaxo reneged on the terms previously decided.

Since then, discussions have "revealed a number of differences between the companies," SmithKline said. The differences — over the merger, management philosophy and corporate culture — could not be reconciled.

"Most importantly," SmithKline said, "Glaxo's recent conduct of these discussions has inevitably strained relations between the two companies."

Glaxo, for its part, issued a terse, one-line statement saying discussions "have been terminated."

Zisson said the one-line press release "is the norm. SmithKline must have been really annoyed."

As a result of the SmithKline-Glaxo talks, Zisson said, some investors bought stock in other likely takeover candidates, such as Zeneca Group plc, of London; Astra AB, of Sodertalje, Sweden; Pharmacia & Upjohn, of London; and Warner-Lambert Co., of Morris Plains, N.J.

"Those stocks haven't gone down that much," Zisson said. "The fact is, we're in a long-term consolidation trend in the industry. People should not walk away from this and think there'll never be another merger."

Glaxo's stock (NYSE:GLX) closed Tuesday at $55.125, down $7.312. SmithKline's shares (NYSE:SBH) ended the day at $66, down $6. *