Wellcome breaks historic link by selling £1.78bn Glaxo stake

The Wellcome Trust, the largest medical research charity, made an historic break with its past yesterday by selling the bulk of its remaining stake in GlaxoSmithKline for £1.78bn.

The trust, which distributes £600m a year to fund scientific research projects and institutes, said it wanted to diversify its £13bn investment portfolio.

Its stake in GSK is the last remaining part of the trust's founding bequest, the Wellcome Foundation drugs company set up by Sir Henry Wellcome, who died in 1936.

Yesterday's sale leaves the trust with around 50 million GSK shares, around 0.9 per cent of the company. It promised not to sell any more stock for six months, and said it intended to keep a "core investment" in GSK for the long term.

Gary Steinberg, chief investment officer of the Wellcome Trust, said the move was part of a wider rebalancing of its portfolio. "We have £13bn invested across a broad range of asset classes, mainly equities but also including property," he said. "Having 20 per cent in any one particular company is a little bit risky."

The trust – chaired by Sir Dominic Cadbury, the former head of Cadbury Schweppes – funded around a third of the Human Genome Project and backs around 20 per cent of medical research carried out at British universities. It has put £300m into a new £1bn fund to renew higher education science facilities. It has centres and makes research grants across the world and has also launched a business subsidiary, Catalyst BioMedica, to help scientists commercialise their discoveries.

It floated the Wellcome Foundation in the 1980s, taking cash and Glaxo shares when the company was acquired in 1995.

The placing of 100 million GSK shares yesterday was done at 1780p, a 2 per cent discount to the previous day's closing price, by Schroder Salomon Smith Barney. Richard Wyatt of SSSB said: "The transaction was more managed to a price than a size, and we are very pleased with the tightness of the discount achieved on such a large block."

GSK itself subscribed for 56 million shares as part of its buyback scheme. Cash-rich GSK had already bought back about 15 million shares under the programme announced last month. GSK shares closed down 32p at 1783p.