GlaxoSmithKline
GSK,
+0.06%
has issued a formal response to investor Elliott Management’s public letter this week calling for a shake-up of the pharmaceutical giant’s board of directors and executive team.
GSK, one of the U.K.’s largest companies by market capitalization, backed its strategy and chief executive, Emma Walmsley, after the U.S. activist fund called on the group’s board to launch a process that would put her future leading the company in jeopardy.
Read: Glaxo Will Face Investors Wednesday. Here’s What to Know.
The company’s public response outlined that the directors and executive team “fully recognize the need to deliver improved and sustained value for all shareholders,” adding that 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 also reaffirmed its strategy to spin off the consumer healthcare business in mid-2022 — leaving a slimmed-down “New GSK” — and more closely integrate its vaccines and pharma business, especially in the realm of research and development.
Read: GlaxoSmithKline Just Announced a Dividend Cut. Why Its Stock Is Rising.
It emerged that Elliott Management had taken a stake in GSK — which has markedly underperformed peers in terms of share-price performance over the last decade — in April. On Thursday, Elliott called on GSK to appoint new independent directors with experience in biopharma and consumer healthcare ahead of the planned spinoff of GSK’s consumer business in mid-2022. These new directors would also help lead a process to consider both internal and external candidates for the executive leadership of GSK and the new consumer health company, the investor suggested.
The activist investor also pushed back on the integration of GSK’s vaccines and pharmaceutical businesses, and said that it supports the proposed separation of the consumer health division. However, Elliott said that any strategic opportunity to sell the consumer business ahead of the planned spinoff “should be diligently pursued.”
Elliott’s letter came a week after an investor event where Walmlsley outlined ambitious new targets to grow sales by more than 5% annually and profits by 10% each year until 2026. Shareholders had welcomed the update, with the stock price rising in kind.
“The ambitions and plans communicated at the Investor Update follow a significant four-year corporate transformation to address historic longstanding issues that have affected GSK’s performance,” the letter from the board said. “These issues have been well recognized by the Board and the Executive team and include all of those identified in Elliott’s letter.”
Shares in GSK rose near 1% in London trading.
