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Elliott Management hedge fund has asked GlaxoSmithKline’s board of directors to appoint new directors and launch a process to determine whether CEO Emma Walmsley is the right candidate to lead the UK drug maker following a referral from the UK. its consumer division.
The lawsuits are part of a series of recommendations sent to GSK and published Thursday by Elliott, in which the activist hedge fund criticizes “years of under-administration” for its low performance in stock prices.
Elliott’s 17-page letter marks the first public confirmation that it built a significant stake in GSK, which has a market value of £ 71.5 billion, from the Financial Times revealed in April that the hedge fund had taken a multimillion-dollar stake.
“Allowing GSK’s long-term loss of performance and operation to persist without taking appropriate action as a matter of urgency would disappoint all of the company’s interests. The board must meet the challenge and present a more ambitious plan to close the gap.” , Elliott wrote to GSK President Jonathan Symonds.
Calls for changes at GSK come as a British pharmacist confirmed last week which would continue with plans to separate its health division from consumer next year, leaving a small business focused entirely on the biopharmaceutical.
As he detailed these plans, Walmsley launched a strong defense of his leadership in which he tried to portray himself as an “agent of change” committed to transforming the UK pharmaceutical group as it focused on investing in its drug pipeline. .
Walmsley, a former director of L’Oréal, who joined GSK in 2010 and took over as CEO in 2017, has been faced with questions about his experience in pharmaceuticals given his experience in business management consumption.
Following the investor update, GSK shares rose and analysts were broadly positive about the company’s stated goal of achieving annual sales growth in excess of 5% annually.
Elliott said in his letter that the investor upgrade “was an important step in the right direction,” but “it was not enough to solve GSK’s credibility challenges.”
He told the GSK board to update its ranks, immediately hiring independent directors with experience in biopharma or consumer health, who would then be divided into committees to interview external and internal candidates.
“Elliott does not advocate a specific outcome, but advocates a robust process, because it is critical that the board assures current and future shareholders that a new leadership of both companies was selected through a credible process that is in line with best practices. of corporate governance “.
The FT reported earlier this month that some GSK shareholders have pointed out that Elliott has privately planted doubts about whether Walmsley should stay after the derivation.
Elliott also asked the board to evaluate any takeover bid for its consumer health division, in a signal that it may still drive a sale of the unit before the separation if a private equity offer appears or of an industry rival.
Elliott added that the board should introduce stronger performance incentives, increase its long-term profit targets and avoid fully integrating its pharmaceutical and vaccine business.
Founded and led by Paul Singer in New York, Elliott manages nearly $ 42 billion in assets and has established itself as a feared activist investor with campaigns in companies such as AT&T, BHP and SoftBank.
His investment in GSK ends at his London office, run by Singer’s son Gordon, and run by portfolio managers Mark Levine and Sebastien de La Riviere.
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