Activist Bluebell takes stake in GSK to push for change at top

GlaxoSmithKline PLC updates

Sign up to myFT Daily Digest to be the first to know about GlaxoSmithKline PLC news.

Activist hedge fund Bluebell Capital Partners has taken a small stake in pharma group GlaxoSmithKline to push for chief executive Emma Walmsley to reapply for her job, backing proposals put forward by fellow investor Elliott Management.

London-based Bluebell manages a tiny €100m compared with the $48bn in assets at Elliott Management, but made waves this year after running a campaign that toppled the chief executive of French food group Danone. Its stake in GSK is about €10m.

In a letter to GSK’s chair Sir Jonathan Symonds on Wednesday, Bluebell demanded the company immediately launch a “thorough and robust process” to find a leader for the drug and vaccine maker, after a spin-off of its consumer health division next year. It also said the board needed more scientific experience.

Marco Taricco and Giuseppe Bivona, chief investment officers at Bluebell, said Walmsley’s almost five years as chief executive had resulted in far lower shareholder return than rivals, and pointed out that she had less experience in the pharma industry than other leaders.

“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,” they wrote.

They added that if Walmsley was reappointed as the best person to lead the drugmaker by a board with greater scientific experience, she would have “renewed credibility both internally and externally”.

Before the launch of Bluebell as a hedge fund in 2019, Taricco and his partners ran an advisory business where they worked closely with activist funds including Elliott.

But he insisted they were not working with Elliott on the campaign. “We are not Elliott’s longa manus. We are not a concerted party,” Taricco told the Financial Times.

Bluebell also urged the board to move from a “reactive” to a “proactive” stance in seeking buyers for the consumer health division, warning it needs to act rapidly to pursue an “alternative transaction”.

GSK plans to list the company in London but some investors believe there would be higher returns if it was sold.

“We believe that consumer healthcare’s leading position and growth prospects should attract interest from selected strategic buyers and, potentially, private equity players,” Bluebell said.

GSK said the board was confident it had the right strategy and team to achieve its goals under Walmsley’s leadership. It added that shareholders have expressed “widespread and strong support” for its plan.

“The points set out in the letter from Bluebell Capital Partners are not new, and in fact are ones we have already made clear we are addressing,” it said.

US hedge fund Elliott took a multibillion-pound stake to lobby for change at GSK earlier this year. It questioned whether Walmsley was the right person to revive the company’s lacklustre pipeline of future drugs, because she lacks a scientific background. She built her career at consumer company L’Oréal before joining GSK to lead its consumer health division.

Bluebell hinted that there could be an alternative leader in GSK’s ranks already. “We understand that GSK has a talented pool of internal managers, so the choice does not necessarily need to be an external one,” it said.

At an investor day in June, Walmsley unveiled ambitious goals for the company, targeting £33bn in sales by 2031. But Bluebell said it did not “dispel investor concerns” or “create overwhelming enthusiasm”, reflected by a lacklustre share price response.

Bluebell also raised concerns that one of the key assets that Walmsley presented at the meeting — a potential vaccine for respiratory illness RSV — could be overtaken by a rival product from Pfizer.