GSK faces fury from investors over £8bn deal

GLAXOSMITHKLINE could face a bruising run-in with investors after an £8bn takeover plan was revealed.

It comes just days after star investor Neil Woodford ditched his £1.2bn stake.

The pharmaceutical giant has reportedly told shareholders to expect it to buy out Swiss rival Novartis’s 36.5pc stake in GSK Consumer Healthcare.

The move, reported in The Sunday Times, would give the firm full control over brands including Horlicks, Nicorette and Beechams.

But it follows Woodford’s decision to sell his GSK holding over its refusal to consider a break-up, and his doubts over the sustainability of its dividend.

Woodford is one of Britain’s most successful fund managers, and his lack of confidence could spook GSK’s other major shareholders.

He has held shares in Glaxo for more than 15 years, but ran out of patience because it wouldn’t split into more focused businesses.

‘The sum of the parts is significantly greater than the whole,’ he said. ‘My viewpoint, and that of other like-minded institutional investors, has been heard but ultimately ignored – repeatedly.’

He said Glaxo’s HIV treatment division had been responsible for more than half of its growth, but warned: ‘If the company’s one remaining growth engine starts to falter, this could pose a threat to its future revenue growth, earnings and cash flows.’

Glaxo is also under threat from rival drug makers such as Hikma Pharmaceuticals, which has applied to make a cut-price equivalent of the blockbuster asthma drug Advair. GSK received a short-term boost last week when US regulators turned down a second application, pushing the threat back until mid-2018.

Chief executive Emma Walmsley, 47, is understood to support Glaxo’s existing structure, with consumer and vaccine divisions given equal weight to pharma.

But she is under pressure to come up with the kind of multi- billion-pound blockbuster drugs produced by big pharma rivals.

The company has struggled to deliver decent returns to investors for about five years due to sluggish drug sales, although steady growth has returned.

Walmsley has already revealed that she is on the lookout for deals, but said this would most likely involve buying early stage experimental drugs.