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GSK rejects activist Elliott’s demands for board and consumer business

imageStock Markets1 hour ago (Jul 02, 2021 06:51AM ET)

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(C) Reuters. FILE PHOTO: GlaxoSmithKline (GSK) CEO, Emma Walmsley, arrives for a meeting in Downing Street in central London, Britain, October 9, 2017. REUTERS/Toby Melville

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By Pushkala Aripaka and Ludwig Burger

(Reuters) -GSK’s board on Friday rejected Elliott’s demands that the British company change its board and sell its consumer healthcare arm after separating it from its pharma business, a day after strongly worded proposals from the activist investor.

“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,” GSK said on Friday, referring to the core pharmaceuticals and vaccine business.

It added that support for GSK’s strategy and leadership was shown in talks with its largest shareholders.

In a letter to GSK’s board, Elliott on Thursday said GSK should review its leadership and consider a sale of its consumer healthcare business as it confirmed it had taken a significant stake in the group.

Elliott demanded that directors with more “biopharmaceuticals and scientific experience” be added to GSK’s board before the planned break-up of the company next year. That new board should then decide the best executive leadership, it added.

GSK responded by stating that governance and oversight had been strengthened with the appointment of two new non-executive directors over the last 18 months, and that more biopharmaceutical expertise was on its way with even more appointments, saying this had been flagged previously.

The British drugmaker also defended its decision to transfer majority ownership in the consumer business to its shareholders in a demerger, combined with plans to sell a minority stake in the business in the near future.

“The demerger structure reflects feedback from a significant proportion of GSK’s shareholders that they wish to own Consumer Healthcare as a new listed entity,” GSK wrote.

Elliott had urged GSK to look at a full sale of the consumer health business, which is a joint venture with Pfizer (NYSE:PFE), should the opportunity arise.

GSK rejects activist Elliott’s demands for board and consumer business

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