RESEARCH TRIANGLE PARK – GlaxoSmithKline CEO Emma Walmsley is getting a big sign of support in a growing dispute with an activist hedge fund that has hinted Walmsley should be replaced.
The GSK board on Friday came out with a strong statement backing Walmsley as she moves ahead with her strategy for what she calls a “New GSK” The strategy includes splitting the company.
Elliott Advisors is the firm pushing for change in the strategy.
“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,” the GSK board declared.
“Under Emma’s leadership, the Board fully expects this team to deliver a step-change in performance and long-term shareholder value creation through the separation and in the years beyond.”
In a letter to the drug giant, Elliottt didn’t call for Walmsley’s ouster as GSK prepares to split the company.
“We believe that existing management should remain in place until a decision is made regarding future leadership,” Elliott said in a published letter.
However in its first comments since the hedge fund acquired a stake in the firm earlier this year it did cite GSK leadership as having “a poor record of operational execution and value creation, leading to skepticism about the company’s future and an under-appreciation of its true potential,” according to Bloomberg.
The letter came a week after Walmsley spelled out plans for a “New GSK.”
In its response to the letter the Board noted:
“The Board and the Executive team fully recognise the need to deliver improved and sustained value for all shareholders. Both strongly believe that the separation of GSK and the launch of the two, new independent companies with thriving people will deliver significant and sustainable value for shareholders, together with positive, scale human health impact for patients and other stakeholders.”
The debate is big news for the Triangle since GSK has a major presence in the region and a manufacturing plant in Zebulon. It also owns the majority stake in drug firm ViiV, which has a significant R&D operation in the Triangle.
“The benefits of the huge transformation we have driven since 2017 are now clear. We have strengthened our R&D and commercial execution, and transformed our group structure and capital allocation, while driving a profound cultural change with new leadership.,” Walmsley explained last week.
“Together, we are now ready to deliver a step-change in growth for New GSK and unlock the value of Consumer Healthcare. With world class capabilities across prevention and treatment of disease, New GSK is exceptionally well positioned to positively impact people’s health and to deliver strong performance and value to shareholders through the decade.”