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

Another activist letter: Bluebell Capital Partners (Bluebell) published an open letter to GSK last week (22nd September 2021). In it, Bluebell effectively echoed the stance taken by Elliott, with a stronger view towards Dame Emma Walmsley and her potential role as the New GSK CEO. Whilst we see the merit in this, as we later discuss, the overall situation is not as clear cut. Why more may follow: GSK has been silent and failed to release information in a timely manner and as promised. The inertness by GSK is reflected in the share price performance since 23rd June 2021. Shareholders need to see tangible evidence that matters are being dealt with. We outline why we believe this is likely in the coming quarter, which should allow for the value discount to be further illuminated.Event-driven value play: We believe that once the market focuses on the sum of the parts of “New GSK” and “Consumer Healthcare” and understands who is to lead the next era of GSK, then the gap to our fair value target should begin to close.

Another activist letter: Bluebell Capital Partners (Bluebell) published an open letter to GSK last week (22nd September 2021). In it, Bluebell effectively echoed the stance taken by Elliott, with a stronger view towards Dame Emma Walmsley and her potential role as the New GSK CEO. Whilst we see the merit in this, as we later discuss, the overall situation is not as clear cut. Why more may follow: GSK has been silent and failed to release information in a timely manner and as promised. The inertness by GSK is reflected in the share price performance since 23rd June 2021. Shareholders need to see tangible evidence that matters are being dealt with. We outline why we believe this is likely in the coming quarter, which should allow for the value discount to be further illuminated.Event-driven value play: We believe that once the market focuses on the sum of the parts of “New GSK” and “Consumer Healthcare” and understands who is to lead the next era of GSK, then the gap to our fair value target should begin to close.

GSK (GSK.L/​​​​GSK.N):  Bluebell Capital Partners Aligns with Elliott

<ul>
<li>It is three weeks since Elliott’s 1st of July 2021 public letter to GSK and a month on from the 23rd of June briefing on the “New GSK”. The share price remains largely static and in line with the FTSE all-share index. </li>
<li>The Second Quarter results are due to be released on the 28th of July 2021 which should allow GSK another opportunity to address the issues raised as a result of Elliott’s campaign and potentially placate the activists and in particular their concerns around GSK’s de-merger plans.</li>
<li>We examine the state of play for GSK and Elliott and discuss several key questions. <ul>
<li>Is this could be the Calm before the storm?  </li>
<li>What are the core areas of the Elliott campaign?</li>
<li>What does GSK's report card look like, post-Elliott's public letter?</li>
<li>Is the announcement of the Consumer Healthcare CEO the right move?</li>
<li>What questions should be asked by investors?</li>
<li>What should we expect next?</li>
</ul>
</li>
</ul>


It is three weeks since Elliott’s 1st of July 2021 public letter to GSK and a month on from the 23rd of June briefing on the “New GSK”. The share price remains largely static and in line with the FTSE all-share index. 
The Second Quarter results are due to be released on the 28th of July 2021 which should allow GSK another opportunity to address the issues raised as a result of Elliott’s campaign and potentially placate the activists and in particular their concerns around GSK’s de-merger plans.
We examine the state of play for GSK and Elliott and discuss several key questions. 
Is this could be the Calm before the storm?  
What are the core areas of the Elliott campaign?
What does GSK's report card look like, post-Elliott's public letter?
Is the announcement of the Consumer Healthcare CEO the right move?
What questions should be asked by investors?
What should we expect next?




GSK (GSK.L/​​​GSK.N): Revisiting Elliott’s Letter and What Remains Unanswered

<ul>
<li>
GSK has issued their response to Elliot’s letter, released 1st July 2021. The content of the response in our view reveals a lack of commitment, and a rather overly defensive stance suggesting GSK have been caught off guard by the letter. </li>
<li>
We discuss what investors (and GSK) should prepare for next. We sense whilst support is being named by GSK certain lines that have been laid out by investors, shareholders, and activists. These lines are set to be tested in the coming months. We discuss the key points and areas where named support may be at risk. We specifically, detail what investors and "long-standing" shareholders might wish to prepare for next from both GSK and Elliot. </li>
<li>The Silver Lining to all this: The one thing which is positive from this response is that GSK has confirmed that potential conditions are now present to achieve a higher share price in the coming months.</li>
</ul>



GSK has issued their response to Elliot’s letter, released 1st July 2021. The content of the response in our view reveals a lack of commitment, and a rather overly defensive stance suggesting GSK have been caught off guard by the letter. 

We discuss what investors (and GSK) should prepare for next. We sense whilst support is being named by GSK certain lines that have been laid out by investors, shareholders, and activists. These lines are set to be tested in the coming months. We discuss the key points and areas where named support may be at risk. We specifically, detail what investors and "long-standing" shareholders might wish to prepare for next from both GSK and Elliot. 
The Silver Lining to all this: The one thing which is positive from this response is that GSK has confirmed that potential conditions are now present to achieve a higher share price in the coming months.


GSK (GSK.L/​​GSK.N) Fails to Impress, in Their Response to Elliot

<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

United Kingdom

GSK is a British multinational biopharmaceutical company focused on the research, development, and delivery of innovative vaccines and specialty medicines. It addresses major disease areas including HIV, respiratory, oncology, and infectious diseases. The company was established in 2000 through the merger of Glaxo Wellcome and SmithKline Beecham, and is headquartered in London, England.

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GSK (GSK LN)

GSK (GSK.L/GSK.N): Bluebell Capital Partners Aligns with Elliott

Another activist letter is no real surprise. GSK has failed to release pertinent information on the Consumer Healthcare spinoff & “New GSK”; As...

David Lepper

GSK (GSK.L/GSK.N): Revisiting Elliott’s Letter and What Remains Unanswered

It is 3 weeks since Elliott’s 1 July public letter to @GSK and a month on from the 23rd June briefing from GSK on “New GSK”. Our latest Report asks...

David Lepper

GSK (GSK.L/GSK.N) Fails to Impress, in Their Response to Elliot

@GSK response to the @elliot letter highlights defensive stance suggesting GSK caught off guard. Our latest commentary covers the response, why...

David Lepper

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

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52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

GSK (GSK.L/​​​​GSK.N): Bluebell Capital Partners Aligns with Elliott

Another activist letter is no real surprise. GSK has failed to release pertinent information on the Consumer Healthcare spinoff & “New GSK”; As...

David Lepper

GSK (GSK.L/​​​GSK.N): Revisiting Elliott’s Letter and What Remains Unanswered

It is 3 weeks since Elliott’s 1 July public letter to @GSK and a month on from the 23rd June briefing from GSK on “New GSK”. Our latest Report asks...

David Lepper

GSK (GSK.L/​​GSK.N) Fails to Impress, in Their Response to Elliot

@GSK response to the @elliot letter highlights defensive stance suggesting GSK caught off guard. Our latest commentary covers the response, why...

David Lepper

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/GSK.N): Bluebell Capital Partners Aligns with Elliott

GSK (GSK.L/GSK.N): Revisiting Elliott’s Letter and What Remains Unanswered

GSK (GSK.L/GSK.N) Fails to Impress, in Their Response to Elliot

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