Star fund manager presses for break-up of GlaxoSmithKline

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The Independent Online

The feted fund manager Neil Woodford yesterday stepped up his campaign to push for a break-up of UK-listed drugs giant GlaxoSmithKline.

Mr Woodford said the £65bn GSK was “like four FTSE 100 companies bolted together”, adding that he did  not think the current leadership was doing “a particularly good job of managing all the constituent parts”.

“The sum of the parts is worth more than the current share price,” he added.

Mr Woodford’s £8.3bn Equity Income fund says  6.05 per cent of its portfolio is in GSK, suggesting that its stake in the company is worth around £500m. 

While that is only 0.5 per cent of GSK’s market capitalisation, Mr Woodford’s track record of successful investment over several decades is likely to make his argument influential among other, larger investors.

“We’d like the business to recognise that it should 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 specialise in those activities run those businesses,” Mr Woodford told BBC Radio Five Live.

GSK’s share price was flat over 2015 and has badly underperformed competitors such as AstraZeneca over the past decade. 

It was also hit by a Chinese bribery scandal in 2013.  More than 100 staff were dismissed, GSK’s former head of Chinese operations was given a suspended three-year jail sentence, and the company was fined $490m (£335m) by the Chinese authorities.

Last year Sky News reported that Mr Woodford had held private talks with Sir Philip Hampton, GSK’s chairman, about his views on the merits of a break-up.

The company has looked at spinning out divisions before. It explored a sale of its HIV drugs business ViiV but is reported to have shelved the idea after Sir Philip was appointed chairman last January. 

And in an interview last May, the GSK chief executive Sir Andrew Witty admitted that three of its divisions – consumer goods, vaccines and pharmaceuticals – had “sufficient scale to have a credible life on their own”. But Sir Andrew stressed there was “no logic” in a split at that time. 

Mr Woodford, who made his name as a highly successful stock picker for Invesco, is a big investor in biotech and other healthcare companies. He set up his own investment fund in 2014 and manages around £14bn of client funds.

Yesterday GSK shares put on 27p to 1371.5p.