Elliot Management fires first shot at GSK’s CEO Emma Walmsley

Walmsley seemingly not out of the woods a week after unveiling plans for the “New GSK”.

A week after she unveiled her plans to spin off the company’s consumer health unit and create the “New GSK”, it seems a proxy fight is gathering steam as the activist investor Elliot Management calls for drastic changes at the pharma giant. In a 17-page open letter directed at the company’s Chairman Jonathan Symonds, the New York-based hedge fund called for an overhaul of the company’s board and also blamed the company’s failure to capture business opportunities on years of under-management – a shot seemingly directed at Walmsley. Elliot also holds the view that GSK has an opportunity to generate up to 45% upside in its share price as it prepares for the full separation, and much more in the years beyond that - a feat it believes could materialize with better execution.

Elliot argues GSK had underperformed against all its peers over nearly every conceivable timeframe, dropping from third-largest pharma to the eleventh largest over the past 15 years. This comes a week after Walmsley presented her plans for GSK following weeks of simmering tension after the activist investor acquired a significant stake in the company. Her vision, which seems to have widespread investor support, includes projections of $46 billion in annual sales from the “New GSK”- to be focused on pharmaceuticals and vaccines. Last year, the two businesses jointly brought in nearly $30 billion, with the consumer health making $14 billion. While she enjoys the board’s support, which swiftly moved to show confidence in her plans after Elliot’s letter, it seems the fight has only just begun.