The hedge fund, which is notorious for trying to influence management decisions of companies it takes stakes in, wrote a 17-page open letter to the board questioning Walmsley’s ability to lead the company, and at the same time has been calling for a shakeup of the board to seat its own representatives.

GSK’s board said it had already appointed two new non-executive directors in the past 18 months. However, it noted that it intends to add new people to the management team ahead of the carve-out, “to increase biopharmaceuticals and scientific experience.”

Elliott’s interest in the drugmaker became known this past April. Recently, the fund has been turning up the heat. Among other things, reports say it has been trying to sow doubt among shareholders about Walmsley’s performance. To appear conciliatory, it has suggested that she might better lead  the consumer health franchise, a function she once had, this time as CEO of a standalone company.  According to British press reports, this argument has not fallen on fertile ground.

Walmsley has said she is fully focused on guiding the drugmaker through a demerger of consumer health in 2022. A least 80% of the consumer business is planned to be distributed to GSK shareholders. Elliott, by contrast, wants the company to consider an outright sale to fund R&D, pay down debt and buy back its shares.

Elliott is also pushing for a spinoff of the vaccines business to shareholders. The activists’ view is that, if fully independent, the vaccines arm could better capture opportunities such as the shingles shot Shingrix/RSV and also be better prepared for future pandemics. GSK management has rejected the idea.

Over the past 10 years, the fund has stirred up the waters at chemical and pharmaceutical companies such as DuPont, Bayer, Akzo Nobel and Alexion Pharmaceuticals. In case of the latter, it talked management into selling the company. The agreed transaction with AstraZeneca has not yet been completed.

Author: Dede Williams, Freelance Journalist