Billionaire plotting shake-up at Glaxosmithkline: Activist investor Elliott builds stake in British drugs giant
- Infamous activist investor Elliott Management has snapped up a multi-billion pound stake in Glaxosmithkline
- Elliott, run by US billionaire Paul Singer, has accumulated a ‘significant’ position in the underperforming company
- Shares jumped 4.6 per cent, or 58.8p, to 1348.4p as the raid caught the City by surprise
Infamous activist investor Elliott Management has snapped up a multi-billion pound stake in Glaxosmithkline as it prepares to launch a shake-up of the FTSE100 drug-maker.
Elliott, run by US billionaire Paul Singer, has accumulated a ‘significant’ position in the underperforming company in a move which could set the stage for a blockbuster boardroom battle.
Shares jumped 4.6 per cent, or 58.8p, to 1348.4p as the raid caught the City by surprise.
Struggle: Dame Emma Walmsley, GSK’s boss and one of the most powerful women in British business, has been trying to boost the company’s flagging fortunes
But the sudden appearance of Elliott on GSK’s shareholder register is understood to have alarmed top executives, who are preparing to draft in heavyweight advisers as they try to bolster the company’s defences.
Dame Emma Walmsley, GSK’s boss and one of the most powerful women in British business, has been trying to boost the company’s flagging fortunes by separating its consumer products arm from its pharma and vaccine division. But shareholders have begun to grow restless – especially since Walmsley, whose background at L’Oreal and Diageo is in consumer goods, announced her intention to lead the more prestigious pharma division after the split.
City sources suggested there would be ‘significant concerns’ among some shareholders if 51- year-old Walmsley (pictured right) insisted on taking the role.
Since she took over as GSK chief executive in 2017, the shares have fallen by 22 per cent, and though shareholders had largely been content with her initial progress, rivals Pfizer and Astrazeneca have performed much better. Both have released Covid vaccines – though Astra’s boss Pascal Soriot has drawn criticism for remaining at his family home in Australia as questions over blood clots emerged – while GSK’s attempts to collaborate on jabs with Sanofi and CureVac have yet to come to fruition.
The unrest at GSK could be advantageous for Elliott, as it tries to create factions among the company’s investor base and pull more shareholders around to its way of thinking.
Following its separation, GSK was planning to run its two main divisions as separate companies. Pfizer already owns around a third of the consumer arm, which includes products from Sensodyne toothpaste to Nicorette patches. But one City source speculated that Elliott may try to set up a sale of its pharmaceuticals division, which ranges from HIV treatments to cutting-edge cancer drugs, to a larger rival rather than keeping it as a standalone company.
Elliott has only just completed another coup in the pharmaceuticals sector. It invested in US firm Alexion Pharmaceuticals in late 2017, and initially behind closed doors tried to push the company to improve its performance.
But last year, it publicly called on Alexion to sell itself, saying the management’s efforts to buy smaller rivals were going nowhere.
Within seven months, Elliott had orchestrated a sale of Alexion to Britain’s Astrazeneca for £30billion.
One City investor told the Mail that Elliott was ‘pushing on an open door’ with GSK, since the separation of pharma and consumer was already underway.
But some shareholders are steadfastly backing Walmsley, pointing out that the turnaround job she inherited was never going to be easy.
GSK and Elliott declined to comment.
WHAT IS ELLIOTT?
Activist investor Elliott Management is renowned for stirring up some of the most acrimonious corporate battles of the last decade.
The firm has a quieter private equity arm, best-known in the UK for owning book shop chain Waterstones.
But its bread-and-butter is snapping up stakes in firms that are ripe for change, and then noisily agitating for a shake-up. It will often maintain connections with a number of potential buyers too, such as private equity firms or major corporates, who can swoop in and buy the company when Elliott has completed its work.
In theory, this allows Elliott to make a profit on the shares it bought, which it then divides among its investors and bosses.