UK drugs giants Glaxo Wellcome and SmithKline Beecham have had their plans to merge cleared by the US Federal Trade Commission.

The go-ahead is the final hurdle for the deal which creates one of the UK's largest companies, trailing in value only Vodafone and, with a market value of �120bn, almost identical in size to BP.

GlaxoSmithKline will be headed by Jean-Pierre Garnier, currently number two at SmithKline, who takes the role of chief executive while Glaxo chief Sir Richard Sykes is to be non-executive chairman.

Its headquarters will be in London, while its operational base will be in the US.

It will be listed on 27 December on both the London and New York stock exchanges.

The new company will have an annual research and development budget of �2.4bn, the largest in the world.

Smoking products

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

The two companies have attempted to merge before.

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

The current merger was announced in January, but was delayed by US competition authorities wanting to take a closer look at the companies' products to help smokers quit.

In the US Glaxo markets the prescription anit-smoking product Zyban while SmithKline sells over-the-counter products Nicorette and Nicoderm.

Sales prompts go-ahead

The companies said that the Federal Trade Commission had decided that a sell-off of any of these products was necessary, but it said it would continue to review that market after the merger.

The tie-up was given the green light by the European Union regulators in May - on the condition some disposals were made - and was given shareholder approval in August.

In order to secure the US approval, SmithKline will sell its Kytril, Famvir and Vectavir/Denavir drugs.