GlaxoSmithKline is fighting back against Elliott Management by backing boss Emma Walmsley.
Responding to a 17-page letter published by the Wall Street raider, the pharmaceutical giant’s board dismissed calls to review Walmsley’s position as chief executive and said they ‘strongly believe’ she is the right person for the job.
The response comes after Elliott demanded the firm conducted a search for an ‘appropriate’ leader after its consumer healthcare business is spun off next year. This would have effectively required Walmsley, 52, to re-apply for her position.
Backing: The GlaxoSmithKline board dismissed calls to review Emma Walmsley’s position
Elliott had also called for a sale of the consumer division to be considered rather than a stock market listing. The hedge fund’s letter amounted to an attack on Walmsley, repeatedly referring to a lack of ‘credibility’ under current management and ‘poor communication’. Elliott was revealed to have taken a significant stake in GlaxoSmithKline earlier this year but only made its intentions clear this week.
But responding yesterday, the GSK board led by chairman Sir Jonathan Symonds said: ‘The board strongly believes Emma Walmsley is the right leader of New GSK.
‘Under Emma’s leadership, the board fully expects this team to deliver a step-change in performance and long-term shareholder value creation through the separation and in the years beyond.’
After the consumer division is separated next year, the remaining ‘New GSK’ will be comprised of the pharmaceuticals and vaccine businesses.
Walmsley has expressed her determination to remain in charge of the New GSK, having led a turnaround effort since 2017 when she first took over from Sir Andrew Witty.
But some investors have questioned that decision, pointing to her lack of scientific background and previous experience in consumer businesses at GSK and L’Oreal. Elliott said the future chief executives of both new arms ‘must have the skillsets and expertise to match their respective tasks at hand’. The statement was widely seen as a snipe at Walmsley.
The firm also called on GSK to seriously consider an alternative to the proposed plan for separation, such as an outright sale.
However, fund manager Jupiter, a top-40 GSK investor, threw its weight behind Walmsley last night. It follows support from Royal London Asset Management and M&G.
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