Investor Elliott wants GSK leadership settled before split

LONDON, July 1 (Reuters) – Activist investor Elliott said GlaxoSmithKline (GSK.L) should review its leadership and consider a sale of its consumer healthcare business, as he confirmed on Thursday that it had taken a significant stake in the British pharmaceutical group.

Last week, GSK laid out plans for a separate consumer healthcare roster next year, which includes brands such as Sensodyne toothpaste and pain relievers Advil, in the company’s biggest upheaval in two. decades. Read more

In a strongly worded letter to the GSK board, setting out five recommendations to tackle what he called years of underperformance, Elliott increased the pressure on CEO Emma Walmsley while approving the split. planned.

The hedge fund said GSK should add pharmaceutical and scientific expertise to its board and then decide who should lead the two companies, reviewing internal and external candidates.

“Elliott strongly believes that the future CEOs of New GSK and CH must have the skills and expertise to match their respective roles,” adding that the current leadership should remain in place for now.

Elliott’s response was expected after reports in April that he had taken a multibillion pound stake.

“Despite having strong businesses in attractive markets, GSK has failed to seize business opportunities due to years of under-management,” said Elliott.

PLANNED SEPARATION

In its initial response, GSK said Elliott raised “inheritance issues.”

GSK’s “ambitious” plan was aimed at generating significant value over the next decade, a spokesperson for the UK company said.

“We believe our shareholders support this strategy and are focused on executing GSK without distraction or delay. This is clearly our priority,” they added, adding that a more detailed response would follow.

The split will allow GSK to focus on its core drug and vaccine business, which suffers from a lack of fast-growing products and patients postponing treatment due to the COVID-19 pandemic, weighing on its actions.

Walmsley, who has led GSK since 2017, said last week that GSK stocks have underperformed for a long time and that she plans to remain at the helm of the pharmaceutical and vaccine business.

Shares rose about 0.7% on Thursday.

“Our analysis suggests that GSK has the potential to generate up to a 45% increase in its share price in the run-up to full separation, and much more in the years to come,” said Elliott.

He also urged GSK to consider a complete sale of the consumer health business, a joint venture with Pfizer (PFE.N), if the opportunity arises and to grant more autonomy to the vaccine business. within the new GSK.

“Providing more autonomy to vaccines could increase his talent retention and agility… maintaining separate divisional reports for vaccines will allow investors to properly assess the business of vaccines, GSK’s crown jewel.” , Elliott said.

Written by Keith Weir; Additional reporting by Ludwig Burger in Frankfurt and Pushkala Aripaka in Bengaluru; edited by David Goodman, Jason Neely and Jane Merriman

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