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Shares in GlaxoSmithKline rally as Elliott said to have built stake

Stock Markets Apr 15, 2021 13:08

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Shares in GlaxoSmithKline rally as Elliott said to have built stake

By Samuel Indyk

Investing.com – Shares in UK pharmaceutical company GlaxoSmithKline (LON:GSK) surged higher on Thursday after the Financial Times reported that activist hedge fund Elliott Management has built up a stake in the company.

The stake is said to be “multibillion-pounds” in size and is a “significant” position for the firm.

Vaccine development and share price underperformance

GSK has been developing a Covid-19 vaccine with French pharmaceutical giant Sanofi (PA:SASY) but, after a dosing mishap, the two companies had to redo an early-stage trial of the jab. The setback put GSK miles behind its peers, with AstraZeneca (NASDAQ:AZN), Pfizer (NYSE:PFE), Johnson & Johnson (NYSE:JNJ) and Moderna (NASDAQ:MRNA) all providing Covid-19 vaccinations across the globe.

As the FT points out, since GSK CEO Dame Emma Walmsley took the reins in April 2017, the GSK share price has fallen 14%. During the same timeframe, AstraZeneca shares are up 49% and Pfizer is up 16%.

Company split

Back in February, GSK confirmed that plans to split its Biopharmaceutical division and Healthcare business into two separate entities was on track for next year.

“Two businesses with a sharper focus should be more efficient than one conglomerate, and it will help reduce the confusion around exactly what GSK is offering investors,” said Hargreaves Lansdown analyst Nicholas Hyett in February. “But it also means investors are buying into what will one day be two radically different businesses.”

It is unclear at the moment what Elliott Management’s plans are for the business but they could include plans to ouster CEO Walmsley or an attempt to stop the company from splitting the two units.

At 13:05BST, GlaxoSmithKline shares were trading higher by 6.2% at £13.70.

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Sunil Agrawal Apr 15, 2021 13:40

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why the split ???

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bill graham Apr 15, 2021 13:40

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Management think the company is too big and unwieldy. They reckon the sum of the parts now exceeds the current value of the whole. Suggestions are that the combined dividend of the two new companies will be about half the current yield, but that may still be reasonable. Good luck my friend.

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Shares in GlaxoSmithKline rally as Elliott said to have built stake

Vaccine development and share price underperformance

Company split

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