Updated from 11:29 a.m. EDT

Glaxo Wellcome

(GLX)

and

SmithKline Beecham

(SBH) - Get Report

, the big British drug makers that had planned to merge this month, said Monday that their combination would be delayed because American antitrust regulators were continuing to examine the companies' smoking-cessation products businesses.

The companies said they now expected to complete their union by year's end, instead of by Sept. 25. The

merger, announced in January 2000, was originally scheduled to close Aug. 21. The first delay was announced in late July.

Investor reaction was somewhat muted in New York trading. Glaxo's American depositary receipts finished flat at $54.56. SmithKline's ADRs dropped 50 cents to finish at $61.31.

Antitrust regulators at the

TheStreet Recommends

Federal Trade Commission

asked the companies for more information about Zyban, a smoking-cessation pill sold by Glaxo, and Nicorette and Nicoderm, the gum and patch, respectively, sold by SmithKline. FTC officials are focusing on whether the combined company would wield too much control over the market for products to help people quit smoking.

"They announced the merger way back at the beginning of the year, and it was never identified as an antitrust issue," said Corey Davis, an analyst for

Chase H&Q

. He rates Glaxo shares a buy, but doesn't formally cover SmithKline, and his firm has not done underwriting for either company. "Why the FTC chose to wait until now to raise the issue is very baffling to me."

Analysts expect Zyban to fetch $146 million in worldwide sales in 2000. The company also markets its active ingredient, Buprion, as the antidepressant Wellbutrin.

Glaxo's projected 2000 revenue is $15 billion, while SmithKline's are $14 billion.

The companies recently agreed to sell off antiviral drugs Famvir and Denavir and anti-nausea drug Kytril.

The

European Commission

gave regulatory approval for the merger in May. The merger was also approved by the shareholders of Glaxo Wellcome and SmithKline Beecham at meetings held on July 31. The merger remains subject to sanction by the British High Court in addition to FTC clearance in the U.S.

"We remain totally committed to the merger and are confident that it will be successfully completed," said Sir Richard Sykes, chairman-elect of the combined company, in a statement.