First, it was powerhouse investor Elliott Management urging GlaxoSmithKline to take steps necessary to turn around its declining fortunes. Now, a much smaller but burgeoning activist investor, Bluebell Capital Partners, has taken over the tag-team match, applying pressure on GSK’s embattled CEO Emma Walmsley.
In a letter to the company’s board of directors, Bluebell asked GSK to force Walmsley to reapply for her job, launch a search for new leadership and beef up the board’s scientific expertise, according to a report from the Financial Times.
“The new GSK deserves the right leadership, able to review and potentially adjust the strategy outlined in June, ensure high quality execution and rebuild trust with employees, customers, suppliers and shareholders,” wrote Guiseppe Bivona and Marco Taricco, chief investment officers at Bluebell.
If Walmsley were to be reappointed by a board with greater scientific experience, Bluebell explained in the letter, she would have “renewed credibility both internally and externally.”
The London-based hedge fund, launched less than two years ago by a group of former investment bankers from Italy, has taken a relatively small £10 million ($11.7 million) stake in GSK. But Bluebell was proven formidable earlier this year when it convinced stockholders to oust the CEO of Danone, the Paris-based food giant known in America as yogurt maker Dannon.
As GSK has suffered a variety of recent R&D setbacks, including an inability to develop a COVID-19 vaccine, the company’s share price performance has dropped relative to that of British rival AstraZeneca, and Walmsley’s leadership has been called into question.
GSK’s plan to spin off its consumer health business, which will take effect next year, is largely seen as a positive step in transforming the company. But in its letter to the board, Bluebell urged for a more “proactive” approach and an “alternative transaction.”
“We believe that consumer healthcare’s leading position and growth prospects should attract interest from selected strategic buyers, and potentially, private equity players,” Bluebell wrote.
When Elliott took a large stake in GSK in April, it laid out an action plan for the drugmaker to salvage something from its “years of under-management,” Elliott said in an open letter to the board. The hedge fund urged for an overhaul of the board and an examination of the company’s leadership.