Global Special Situations & Strategy, SR Services Ltd

David Lepper

Global Special Situations & Strategy

SR Services Ltd

SR Services provides Strategic Knowledge and Solutions services for Family Offices and Corporate Business. 

We deliver this via advisory services, strategic planning, opportunity analysis/sourcing, as well as solution implementation. 

Whilst, we create intellectual discipline and operational leverage for your projects or daily activities, our ultimate objective is to empower whilst enhancing your decision making. 

Strategic Knowledge and Solutions

Event-Driven

<ul>
<li>
Elliot's 17-page “open letter” to GSK signals the start of a public campaign, which is expected to see remuneration and proxy-led campaign increase in velocity. </li>
<li>
Elliot Advisors' frustrations have been unleashed following the 23rd June 2021 briefing, via this letter. We examine the facts presented and how these may be interpreted. </li>
<li>
Elliot's investment case outlined in the letter further supports our view around the embedded value within GSK, as well as the likelihood of increased activism.</li>
<li>We discuss the next steps for GSK and investors and why we support Elliot's view to &gt;45%: It is now up to GSK and investors to firm up their positions, as well as for fellow activists to decide if they wish to join the public campaign. We detail why we fully expect further activist funds to join the campaign. </li>
</ul>



Elliot's 17-page “open letter” to GSK signals the start of a public campaign, which is expected to see remuneration and proxy-led campaign increase in velocity. 

Elliot Advisors' frustrations have been unleashed following the 23rd June 2021 briefing, via this letter. We examine the facts presented and how these may be interpreted. 

Elliot's investment case outlined in the letter further supports our view around the embedded value within GSK, as well as the likelihood of increased activism.
We discuss the next steps for GSK and investors and why we support Elliot's view to &gt;45%: It is now up to GSK and investors to firm up their positions, as well as for fellow activists to decide if they wish to join the public campaign. We detail why we fully expect further activist funds to join the campaign. 


GSK (GSK.L/​GSK.N) Elliot Goes Public with Campaign Demands

<ul>
<li>
Elliot Advisor's activist campaign has put some pressure on GSK. The "New GSK" Investor Day on 23rd June was the first public event since the campaign broke in the mainstream media. </li>
<li>
The Investor Day was always expected to form a key defence forum for management to justify the board's and management’s strategy. As expected, the CEO and loyal lieutenants came out swinging.</li>
<li>
While some good data points were presented at the briefing around the embedded value behind the stock and the progress of the Vaccine and Speciality Business, management made some strategic missteps in the briefing.  </li>
<li>
Look for three items to benefit GSK's share price in the coming quarters. Firstly, a greater focus from the market on the value which exists within. Secondly, a strong likelihood that Elliot Advisors won't be the last activist making demands on GSK. Thirdly, good potential for an acceleration of fundamentals.</li>
<li>
We walk through the good, bad, and the ugly from the briefing, and highlight why Activist presence is but one key reason why GSK is set to break out of a long term trading range and upside to a fair value of GBP21.25/share or US$59.00/ADR is increasingly likely. </li>
<li>Our note builds off the Investment thesis and review of Elliot's campaign in <a href="https://www.smartkarma.com/insights/gsk-gsk-l-why-activism-might-be-the-right-medicine" target="_blank" data-smartkarma-citation="insights:53323" rel="noopener">GSK (GSK.L) Why Activism Might Be the Right Medicine.</a>
</li>
</ul>



Elliot Advisor's activist campaign has put some pressure on GSK. The "New GSK" Investor Day on 23rd June was the first public event since the campaign broke in the mainstream media. 

The Investor Day was always expected to form a key defence forum for management to justify the board's and management’s strategy. As expected, the CEO and loyal lieutenants came out swinging.

While some good data points were presented at the briefing around the embedded value behind the stock and the progress of the Vaccine and Speciality Business, management made some strategic missteps in the briefing.  

Look for three items to benefit GSK's share price in the coming quarters. Firstly, a greater focus from the market on the value which exists within. Secondly, a strong likelihood that Elliot Advisors won't be the last activist making demands on GSK. Thirdly, good potential for an acceleration of fundamentals.

We walk through the good, bad, and the ugly from the briefing, and highlight why Activist presence is but one key reason why GSK is set to break out of a long term trading range and upside to a fair value of GBP21.25/share or US$59.00/ADR is increasingly likely. 
Our note builds off the Investment thesis and review of Elliot's campaign in GSK (GSK.L) Why Activism Might Be the Right Medicine.



GSK (GSK.L/GSK.N) Activists Likely to Question the Spin-Off

<ul>
<li>
We see a fair value of GBP21.25/share, without significant value uplift from the Consumer Healthcare spinoff. Reviewing the Consumer Healthcare stub trade suggests GSK trades at 30-40% discount to its Pharma peers.</li>
<li>
We identify six fundamental reasons supporting a breakout from GSK's 10-year trading range.</li>
<li>GSK being subject to an Activist (Elliot Advisors) on its register is just one of our reasons for a share price re-rating. We see this as providing the CEO with a stronger mandate for change. </li>
<li>
Management providing News flow and clarity around growth plans and the Consumer Healthcare Spinoff on 23rd June 2021 should create visibility on the embedded value to be unlocked.</li>
</ul>



We see a fair value of GBP21.25/share, without significant value uplift from the Consumer Healthcare spinoff. Reviewing the Consumer Healthcare stub trade suggests GSK trades at 30-40% discount to its Pharma peers.

We identify six fundamental reasons supporting a breakout from GSK's 10-year trading range.
GSK being subject to an Activist (Elliot Advisors) on its register is just one of our reasons for a share price re-rating. We see this as providing the CEO with a stronger mandate for change. 

Management providing News flow and clarity around growth plans and the Consumer Healthcare Spinoff on 23rd June 2021 should create visibility on the embedded value to be unlocked.


GSK (GSK.L) Why Activism Might Be the Right Medicine.

United States

GSK PLC operates as a research-based pharmaceutical company. The Company develops, manufactures, and markets vaccines, prescription, and over-the-counter medicines, as well as health-related consumer products. GSK provides products for infections, depression, skin conditions, asthma, heart and circulatory disease, and cancer.

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GSK (GSK US)

GSK (GSK.L/GSK.N) Elliot Goes Public with Campaign Demands

Elliot's @GSK “open letter” signals the start of a remuneration & proxy campaign. GSK's response is key to neutralising campaign & maintaining...

David Lepper

GSK (GSK.L/GSK.N) Activists Likely to Question the Spin-Off

Good data points were presented at the #GSK briefing around the embedded value, but strategic missteps by management may question the spin-off...

David Lepper

GSK (GSK.L) Why Activism Might Be the Right Medicine.

GSK share price at the lower level of a 10-year trading range. An activist & an 23rd June briefing from the CEO on an asset spin-off and future...

David Lepper

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

GSK (GSK.L/​GSK.N) Elliot Goes Public with Campaign Demands

Elliot's @GSK “open letter” signals the start of a remuneration & proxy campaign. GSK's response is key to neutralising campaign & maintaining...

David Lepper

GSK (GSK.L/GSK.N) Activists Likely to Question the Spin-Off

Good data points were presented at the #GSK briefing around the embedded value, but strategic missteps by management may question the spin-off...

David Lepper

GSK (GSK.L) Why Activism Might Be the Right Medicine.

GSK share price at the lower level of a 10-year trading range. An activist & an 23rd June briefing from the CEO on an asset spin-off and future...

David Lepper

GSK (GSK.L/GSK.N) Elliot Goes Public with Campaign Demands