UK government ‘concerned’ over Elliott Management’s plans for GSK

The UK government has concerns over activist investor Elliott Management’s plans for GlaxoSmithKline (GSK) after the hedge fund acquired a ‘significant’ stake in the British drugmaker last month.

According to The Times, Britain’s Secretary of State for Business, Energy and Industrial Strategy is believed to have asked government officials to back GSK’s chief executive officer Emma Walmsley – in particular her ongoing restructuring of the company.

There is speculation over what exactly Elliott Management’s plans for the company could entail – with potential scenarios being the sale of GSK or its pharmaceuticals or vaccines divisions.

Walmsley has come under increasing pressure to improve GSK’s performance ahead of a planned split of the company’s consumer health and pharma divisions, which is 'well underway'.

The split, which was initially announced in 2018, will result in GSK being separated into two companies – one focusing on speciality pharma and the other focusing on consumer healthcare.

Following the planned completion of the separation, due in mid-2022, GSK will remain solely focused on pharmaceuticals and vaccine products.

In addition, the British drugmaker has faced a number of setbacks recently, in particular relating to a delay of its Sanofi-partnered COVID-19 vaccine, although GSK recently revealed positive data for the jab, along with data on another plant-derived vaccine in development with Canadian biotech Medicago.

Further tension emerged last month after it was reported that activist hedge fund Elliott Management had built up a sizeable stake in the British drugmaker.

Elliott Management is known to be an ‘aggressive activist’ investor – in the pharma industry, the hedge fund petitioned for the sale of Alexion Pharmaceuticals ahead of its subsequent acquisition by AstraZeneca in December 2020.

Last week, however, major shareholders threw their support behind Walmsley and GSK’s executive team, including BlackRock, the drugmaker’s largest investor as well as Royal London and Dodge & Cox.

All three shareholders have reportedly been in contact with Jonathan Symonds, chairman of GSK, to offer their support in a potential clash with Elliott Management, according to The Mail.