* GSK backs CEO Walmsley to lead it after split
* Says governance strengthened with scientific appointments
* Says separation structure after feedback from many
shareholders
(Adds Elliott, analyst comment, updates share price)
By Pushkala Aripaka and Ludwig Burger
July 2 (Reuters) - GSK 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, 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.
Elliott declined to comment on GSK's detailed response on
Friday.
EVOLUTION
The London-listed company on June 23 laid out plans to spin
off its consumer healthcare arm into a separately listed
company, in a move that would deliver an 8 billion pound ($11
billion) special dividend for its underperforming drugs
business.
"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.
"Even in the absence of a CHC (consumer healthcare) trade
sale or any other material actionable proposals, we expect
Elliott's involvement to translate into positive near-term share
price evolution," Citi analysts wrote in a note.
GSK shares were up 0.1% at 1518 GMT after gaining 1.3% on
Thursday. The stock is up about 7% so far this year.
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 was first reported by
the Financial Times in April.
($1 = 0.7252 pounds)
(Reporting by Pushkala Aripaka in Bengaluru, Ludwig Burger in
Frankfurt and Svea Herbst in Boston
Editing by David Goodman, Kirsten Donovan and Louise Heavens)
Glaxosmithkline (GSK)