Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

GSK rejects Elliott's demands for board change, consumer sale

Stock Markets Jul 02, 2021 12:21PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Reuters. FILE PHOTO: GlaxoSmithKline (GSK) CEO, Emma Walmsley, arrives for a meeting in Downing Street in central London, Britain, October 9, 2017. REUTERS/Toby Melville 2/2

By Pushkala Aripaka and Ludwig Burger

(Reuters) -GSK on Friday rejected Elliott's demands that the British company change its board and sell its consumer healthcare arm after separating it from its pharma business, a day after strongly worded proposals from the activist investor.

"The Board strongly believes Emma Walmsley is the right leader of New GSK and fully supports the actions being taken by her and the management team," GSK said, referring to the core pharmaceuticals and vaccine business.

It added that support for GSK's strategy and leadership was shown in talks with its largest shareholders.

In a letter to GSK's board, Elliott on Thursday said GSK should review its leadership and consider a sale of its consumer healthcare business as it confirmed it had taken a significant stake in the group.

Elliott demanded that directors with "more biopharmaceuticals and scientific experience" be added to GSK's board before the planned break-up of the company next year. That new board should then decide the best executive leadership, it added.

GSK said governance had already been strengthened with the appointments of former Bristol-Myers Squibb (NYSE:BMY) executive Charles Bancroft and Anne Beal, an entrepreneur, health policy expert and paediatrician, as non-executive directors in May 2020 and May 2021 respectively.

It added that more biopharmaceutical expertise was on its way with further appointments, noting this had been flagged previously.

Elliott declined to comment on GSK's detailed response on Friday.

EVOLUTION

The London-listed company on June 23 laid out plans to spin off its consumer healthcare arm into a separately listed company, in a move that would deliver an 8 billion pound ($11 billion) special dividend for its underperforming drugs business.

"The demerger structure reflects feedback from a significant proportion of GSK's shareholders that they wish to own Consumer Healthcare as a new listed entity," GSK wrote on Friday in defence of the plan.

Elliott had urged GSK to look at a full sale of the consumer health business, which is a joint venture with Pfizer (NYSE:PFE), should the opportunity arise.

"Even in the absence of a CHC (consumer healthcare) trade sale or any other material actionable proposals, we expect Elliott's involvement to translate into positive near-term share price evolution," Citi analysts wrote in a note.

GSK shares were up 0.1% at 1518 GMT after gaining 1.3% on Thursday. The stock is up about 7% so far this year.

Walmsley, CEO since 2017, has made sweeping leadership changes in a bid to boost the drug development success rate, where the group had fallen behind peers, and improve the commercial performance of its sales force.

Yet, she has acknowledged that the stock continues to underperform against industry benchmarks.

Elliott's arrival on GSK's register was first reported by the Financial Times in April.

($1 = 0.7252 pounds)

GSK rejects Elliott's demands for board change, consumer sale
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email