Activist investor Elliott Management Corp. has called on U.K. pharmaceutical giant GlaxoSmithKline PLC to assess its board and management ahead of a long-planned separation of its consumer-healthcare business.
The investor criticized GlaxoSmithKline's "poor record of execution and value creation" in a letter published Thursday, its first public intervention over the FTSE 100 company since it built a significant stake. It said the company's combined businesses should be worth around 45% more than GlaxoSmithKline's current valuation.
Elliott urged the company's board to appoint nonexecutive directors with biopharma and consumer-health expertise prior to the separation and to run robust processes for selecting the best executive leadership for the two businesses, considering both internal and external candidates.
GlaxoSmithKline Chief Executive Emma Walmsley, who became CEO in 2017, has driven more investment into research as well as the separation of the consumer-healthcare business.
"Elliott is not advocating a specific outcome but is arguing for a robust process, because it is critical that the board assure current and future shareholders that the new leadership of both companies was selected through a credible process that conforms to corporate governance best practices," the investor said. It said existing management should remain in place until a decision is made on new leadership.
The investor also said GlaxoSmithKline should incentivize a stronger performance and greater ambition, improve profitability while investing more in research-and-development, display openness to value-maximizing pathways and preserve the nimbleness of its vaccines and pharma operations.
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