U.K. investor Woodford calls again for breakup of 'complicated' GSK

Neil Woodford

In October, high-profile U.K. fund manager Neil Woodford advocated for a four-way breakup of GlaxoSmithKline ($GSK), a company he said could unlock "significant shareholder value" by splitting apart. And he hasn't quit championing that idea.

As Woodford told the BBC Friday, GSK is so complicated that it runs itself "like four FTSE 100 companies bolted together"--and, on top of that, the pharma giant doesn't "do a particularly good job of managing all of the constituent parts."

Instead, he said, he'd like to see the company "focus on certain activities in the portfolio and do them better than they have done in the past, demerge the bits they haven't managed particularly well and let other people who specialize in those activities run those businesses."

It's basically Big Pharma's slim-down mantra to a tee. Over the past few years, companies have been hiving off or trading away noncore assets to home in on what they do best; Glaxo itself was part of a multibillion-dollar asset swap last year with Novartis ($NVS) that sent its oncology meds to Switzerland, bolstered its position in the vaccines market and set up an industry-leading consumer health joint venture.

But the way Woodford sees it, that's not enough. The sum of Glaxo's parts is still worth more than its current share price, he told the news service.

GSK CEO Andrew Witty

If it's a large-scale restructuring he wants, though, he'll have to take it up with CEO Andrew Witty, who made it clear on the company's Q3 conference call that the drugmaker had thoroughly considered--and decided against--any divestment moves. Glaxo has already weighed an established products sale, he said, but "that just wasn't a good economic transaction to do."

And as far as a spinoff of surging HIV drugs business ViiV Healthcare goes, it's not happening, the CEO said, echoing the decision GSK made last May after weighing a divestment for months.

"We took the decision not to separate it because we believed we were the best owners," he said. "… And I think we've been vindicated since."

- read the BBC story

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