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Another Activist Investor Rattles Sabers at GSK

27.09.2021 - Activist hedge fund Bluebell Capital Partners has joined activist investor Elliott Management, GlaxoSmithKline’s long-time nemesis, in trying to force a leadership shakeup at the UK drugmaker. The pair have called for chief executive Emma Walmsley to reapply for her job.

Elliott has long been unhappy with Walmsley’s reluctance to follow its advice on breaking up the company. The CEO has now agreed to spin off the consumer health division, but the activists – who have had the company’s first female chief executive in their crosshairs since she took office – are pushing for more changes.

According to business newspaper Financial Times, London-based Bluebell, a fund launched less than two years ago by a group of former investment bankers from Italy, manages assets worth only €100 million compared with the $48 billion Elliott manages, but it already has flexed its muscles in the industrial sector.

First, the investor launched a campaign that toppled Emmanuel Faber, the chief executive of French food group Danone. Bluebell has now taken a stake in GSK worth about €10 million. The fund is also at war with Solvay, most recently pushing the Belgian chemical company to replace CEO Ilham Kadri, on grounds she has failed to stop the discharge into the sea of waste from a soda ash production plant in Italy.

In a letter to GSK’s chairman Jonathan Symonds, Bluebell said the drug and vaccine maker should immediately launch a “thorough and robust process” to find a new CEO following conclusion of the spinoff. They note that during Walmsley’s nearly five-year tenure, the company’s share price has lagged that of its rivals.

Saying that Walmsley – who once headed French cosmetics group Loréal – has less experience in the pharma industry than other companies’ leaders, the fund said,“ GSK deserves the right leadership able to review and potentially adjust the strategy outlined in June, ensure high quality execution, and rebuild trust with employees, customers, suppliers, and shareholders.”

Being reappointed to the job by a board with greater scientific experience, would give her “renewed credibility both internally and externally,” Bluebell’s letter continued, adding that this would allow GSK to move from a “reactive” to a “proactive” stance in seeking buyers for the consumer health division. The investor suggested also that GSK needs to act rapidly to pursue an “alternative transaction.”

Both Bluebell and Elliott want to see the spinoff sold – potentially to private equity firms – rather than listed in London, as current plans foresee. In remarks that some interpret to mean it is pushing for another company manager to take Walmsley’s job, Bluebell wrote: “We understand that GSK has a talented pool of internal managers, so the choice does not necessarily need to be an external one.” Up to now, GSK’s board  has expressed confidence in the CEO’s strategy.

Author: Dede Williams, Freelance Journalist

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