SkyePharma sets two-week deadline for break-up

SkyePharma, the drug developer company which put itself up for sale in November, has outlined a two-week deadline to set out a new strategy for the company, including disposals of at least one of its three divisions.

The company's non-executive directors met rebel shareholders for a showdown over the future of its chairman and founder, Ian Gowrie-Smith, and over the stuttering progress of a strategic review that was meant to generate an auction of the company.

No acceptable bids were forthcoming by the first deadline of yesterday, and SkyePharma has admitted it is more likely that only parts of the company will be sold off. Institutional investors holding 16 per cent of the company's shares met the non-executive team - excluding Mr Gowrie-Smith - yesterday to demand the chairman's resignation. The rebels are JO Hambro, Insight, the fund management arm of HBOS, and Morley, which invests Norwich Union customer's money.

Non-executives are believed to be ready to open the issue of the chairmanship after filling the vacant post of chief executive. A board meeting will examine a shortlist of three external candidates before the end of January.

Meanwhile, another disgruntled investor, Fidelity, is believed to have further plans to sell down its holding in SkyePharma, where it had previously been the largest shareholder. On Friday, it cut its stake from 10.9 per cent to 8.7 per cent and that was down to 8.5 per cent yesterday. SkyePharma shares were the worst performers in the FTSE 350, down 5.2 per cent to 45.5p.

Both sides at yesterday's meeting agreed SkyePharma should have a significant update on management and on the strategy review by the end of the month.

Mr Gowrie-Smith did not attend because he is in Australia. He has built SkyePharma into a significant player in speciality pharmaceuticals over a decade at the helm, but the share price has failed to perform and the last straw for the rebel investors was a deeply discounted £35m rights issue late last year. Michael Ashton, the chief executive, has announced his intention to retire. He will leave as soon as a replacement is found.