Proactive Investors - Run By Investors For Investors

GlaxoSmithKline PLC boss to quit in 2017 amid shake-up talk

Drug giant says Andrew Witty will go in March 2017
GlaxoSmithKline PLC boss to quit in 2017 amid shake-up talk
There has been market talk that Glaxo could either be taken over by a rival or broken up

--- Updates with broker comment and latest share price ---

Drug giant GlaxoSmithKline PLC (LON:GSK) has said its chief executive is stepping down, paving the way for a potential shake-up.

Glaxo said Andrew Witty would retire in at the end of March 2017, effectively confirming speculation late last month that the company had started looking for a successor.

The announcement is likely to be seen as a move by the company to placate those investors who have been calling for a break-up of Glaxo into its various parts.

There has been speculation that Glaxo could either be taken over by a rival or broken up, with its consumer healthcare division being a possible target.

Prominent fund manager Neil Woodford has demanded such a move, but Witty has responded that he believes the company is better staying intact.

Broker Killik & Co said: "This announcement signals the potential for a significant change in corporate strategy.

"An incoming chief executive, especially if an external hire, could push for a break-up of the company, or if results are disappointing, could place the dividend at risk."

Shares in Glaxo fell 1.84% to 1386 following the news.

GlaxoSmithKline is the ninth FTSE 100 company to be planning a change of chief executive in the next two years, according to AJ Bell investment director Russ Mould.

Whitbread (LON:WTB) has already installed Alison Brittain as chief executive, while M&S (LON:MKS), Bunzl (LON:BNZL), Admiral (LON:ADM), Babcock (LON:BAB), Wolseley (LON:WOS) and Rio Tinto (LON:RIO) will change theirs this year.

Glaxo and possibly BAE Systems (LON:BA.) are set to change their chief executives next year.

Mould said: "On the whole, a firm’s share price can welcome a new boss.

"On average, for the changes already seen, the company’s share price has increased by 16.4% to date.

"This compares to a FTSE 100 average decline of 3.6% - so outperformance of 20 percentage points."

In a statement confirming his plan to go next year, Witty said "very significant progress" last year had laid the foundations for Glaxo to achieve its medium-term outlook.

Witty said: “By next year, I will have been chief executive for nearly 10 years and I believe this will be the right time for a new leader to take over.

"In making this decision, it has been important to me that the board have the time to conduct a full and proper process and that we sustain the momentum of our current business performance."

Glaxo's chairman Philip Hampton said: "Andrew’s retirement next year will represent the culmination of 32 years of service and leadership to Glaxo and the industry.

"In the meantime, we will now start a formal process to appoint his successor, whilst also ensuring the Group remains focussed on execution of its strategy to drive growth and performance.”


Register here to be notified of future GSK Company articles
View full GSK profile

GlaxoSmithKline plc Timeline

February 22 2017
February 08 2017

Related Articles

July 26 2016
Chief executive Cameron Reynolds told Proactive: "It's one thing to be a science project. It's another to have products and we are right on the cusp of that.”
picture of drug research
February 20 2017
“The positive results from this feasibility award may lead to other opportunities to secure additional funding awards to advance the programme further," Dr John Reader, Sareum's chief scientific officer said.
November 21 2016
The flagship product, CardioCel, is a bio-engineered tissue scaffold used in the heart valve repair market.

© Proactive Investors 2017

Proactive Investor UK Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.