Activist Hedge Fund Bluebell Wants Glaxo Chairman Replaced

(Bloomberg) --

Activist hedge fund Bluebell Capital Partners has asked GlaxoSmithKline Plc to replace its chairman as well as chief executive officer, piling further pressure on the drugmaker.

Bluebell's partners Giuseppe Bivona and Marco Taricco made the demand in a letter to the company, a copy of which was seen by Bloomberg. Last month, the firm invested about 10 million pounds ($14 million) in Glaxo, a tiny stake in a company with a market value exceeding 71 billion pounds.

Chairman Jonathan Symonds “does not have a precise understanding of the causes of the prolonged and severe underperformance” of Glaxo shares, they said. “We have reached the conclusion that a more radical change agenda than we have previously envisaged is required.”

Glaxo has been defending its strategy in recent months after it emerged in April that Elliott Investment Management, which has a long track record of forcing sales or breakups, had taken a stake in the company. While both Elliott and Bluebell broadly agree with the company's plans to spin off its consumer arm, they've questioned the decision to keep CEO Emma Walmsley at the helm of the remaining business.

The stock rose as much as 4.8% in London after Bloomberg reported Glaxo's consumer unit is drawing interest from private equity firms, citing people with knowledge of the matter.

“We completely reject the content and claims made in this letter,” Glaxo said in a statement. “We remain absolutely focused on tackling the root causes of previous historical underperformance.”

Glaxo also said its board is confident it has the “right strategy and right team to deliver a step-change in growth.”

In July, Elliott published a letter calling on Glaxo to run a search for a possible successor to Walmsley, something Bluebell has also asked for, citing her non-scientific background. They have also pressed for the U.K. drugmaker to be more open to a sale of the consumer unit.

Last week Symonds held a meeting with investors where Gordon Singer, head of Elliott Investment Management's London office, again questioned the performance of GSK.

Britain's largest drugmaker called the meeting to provide an update on its plans to split the consumer division from the pharmaceutical and vaccines business next year. The company expects to appoint a new chair for the consumer business by year-end. Glaxo has also committed to beefing up the pharma and scientific expertise on the board of the pharmaceutical and vaccines business that will remain after the split.