Glaxo's Breakup Will Be Painful

The Week: Morningstar columnist Rodney Hobson wonders whether the dismantling of GlaxoSmithKline, the most expensive breakup in corporate history, is a wise move

Rodney Hobson 7 February, 2020 | 9:36AM
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You know you are getting old when you read the wonderful news about the breakup of a top-heavy group and you fondly remember how wonderful it was when it was put together. Smith and Kline were stronger combined as a pharmaceutical company; then it was “Hark the herald angels sing, Beecham’s pills are a very good thing” and Smithkline Beecham was born; then “Glaxo” was brought into the mix and the Beecham name could be consigned to history.

Now, apparently, it is worth spending £2.4 billion on breaking up GlaxoSmithKline (GSK). The latest triumph of activist investors over the needs of ordinary shareholders was mooted a year ago but only now do we discover that this madness will be one of the most expensive breakups in corporate history. How does this make financial sense?

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Domino's Pizza Group PLC364.20 GBP0.00
GlaxoSmithKline PLC1,510.80 GBP0.00Rating
Whitbread PLC2,837.00 GBP0.00

About Author

Rodney Hobson

Rodney Hobson  is a columnist for and author of several investing books, including The Dividend Investor and How to Build a Share Portfolio.