(Adds background, shares)
By Pushkala Aripaka and Ludwig Burger
July 2 (Reuters) - GSK's board on Friday rejected
Elliott's demands that the British company change its board and
sell its consumer healthcare arm after separating it from its
pharma business, a day after strongly worded proposals from the
activist investor.
"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 said on Friday, referring to
the core pharmaceuticals and vaccine business.
It added that support for GSK's strategy and leadership was
shown in talks with its largest shareholders.
In a letter to GSK's board, Elliott on Thursday said GSK
should review its leadership and consider a sale of its consumer
healthcare business as it confirmed it had taken a significant
stake in the group.
Elliott demanded that directors with more
“biopharmaceuticals and scientific experience” be added to GSK’s
board before the planned break-up of the company next year. That
new board should then decide the best executive leadership, it
added.
GSK said governance had already been strengthened with the
appointments of former Bristol-Myers Squibb executive
Charles Bancroft and Anne Beal, an entrepreneur, health policy
expert and paediatrician, as non-executive directors in May 2020
and May 2021 respectively.
It added that more biopharmaceutical expertise was on its
way with further appointments, noting this had been flagged
previously.
GSK last week laid out plans to turn its consumer healthcare
arm into a separately listed company, in a move that will
deliver an 8 billion pound ($11 billion) special dividend for
its underperforming drugs business, and sell a minority stake in
the near future.
"The demerger structure reflects feedback from a significant
proportion of GSK’s shareholders that they wish to own Consumer
Healthcare as a new listed entity," GSK wrote on Friday in
defence of the plan.
Elliott had urged GSK to look at a full sale of the consumer
health business, which is a joint venture with Pfizer,
should the opportunity arise.
GSK shares were up 0.2% at 1057 GMT after gaining 1.3% on
Thursday.
Walmsley, CEO since 2017, has made sweeping leadership
changes in a bid to boost the drug development success rate,
where the group had fallen behind peers, and improve the
commercial performance of its sales force. Yet, she has
acknowledged that the stock continues to underperform against
industry benchmarks.
Elliott's arrival on GSK's register with a multi-billion
stake was first reported by the Financial Times in
April.
(Reporting by Pushkala Aripaka in Bengaluru and Ludwig Burger
in Frankfurt
Editing by David Goodman, Kirsten Donovan)
Glaxosmithkline (GSK)