Benzinga | Jul 1, 2021 03:05PM EDT

Activist Fund Elliott Management Wants GlaxoSmithKline Board Shakeup For 'Years Of Under Management'

* Elliott Management has finally made its intentions around GlaxoSmithKline plc (NYSE:GSK) known and calls for changes to rescue GSK from what it called "years of under-management."

* In an open letter to GSK Chairman Jonathan Symonds, the investment firm wants a "fit-for-purpose" board to choose "the best possible leadership" for GSK and its upcoming consumer health spinoff.

* The demand marks a challenge to the current leadership of CEO Emma Walmsley, who is already struggling to win over key shareholders.

* Since reports emerged in April that Elliott had taken a significant stake in GSK, the fund has been trying to win investor support to remove Walmsley after the separation.

* Elliott has reportedly said that Walmsley should head the outgoing consumer health business rather than the remaining GSK focused on drugs and vaccines.

* At the investor event, Walmsley outlined GSK's goal of delivering annual sales growth of 5% in the next five years and reaching ?33 billion in revenues by 2031.

* While the investor update was "an important step in the right direction," it "was not sufficient to resolve GSK's credibility challenges," Elliott said in its letter.

* Further, Elliott also said it was against GSK's idea to integrate the vaccine and pharma departments after the consumer health split. The vaccine business should instead be autonomous, the firm wrote.

* Elliott based its recommendations on what it called "severe underperformance" at GSK because of "years of under-management." By Elliott's calculation, the new GSK and consumer health unit warrant a combined valuation that's more than 45% higher than GSK's valuation today.

* Price Action: GSK shares are up 1.04% at $40.24 during the market session on the last check Thursday.

* Photo by Stekzar via Wikimedia