GSK break-up proposal puts investors at loggerheads
GlaxoSmithKline’s [LON:GSK] shareholders have formed opposing camps on the question of whether the UK-based drugs group ought to be split up and its board revamped, The Sunday Telegraph reported.
The report noted that the activist fund Och-Ziff has been calling for GSK to begin planning for chief executive Andrew Witty’s exit, while influential fund manager Neil Woodford has urged a restructuring of the GBP 68bn (USD 99bn) group into four new companies along the existing divisional lines of vaccines, pharmaceuticals, HIV treatments and consumer health.
Axa Investments fund manager Richard Marwood said last year he met Philip Hampton, GSK chairman, who conceded to him that the group has structural problems. Hampton said the issue needs examining from a strategic perspective but is far from being resolved, Marwood said in the report. He added that the matter of CEO Witty’s position is reaching “crunch point” and strategy needs to be tweaked.
One unidentified top-20 GSK shareholder was quoted describing the company as a “supertanker” and stating that Witty ought to be given a chance to turn around a difficult situation. He asserted that the group’s diversified portfolio has benefited it, for example by offsetting the “lumpy” drug-discovery unit with steady income from the consumer operations, the item reported.
According to a person with close links to GSK, the company is not likely to implement any split for a minimum of two years, to enable assets from a 2014 Novartis deal to bed in and so boost synergies which would enhance any sale price.
Sunday Telegraph