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

Stock market chart

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?

SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk

To view this article, become a Morningstar Basic member.

Register For Free

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Domino's Pizza Group PLC360.00 GBX1.52
GlaxoSmithKline PLC1,456.40 GBX-2.48
Whitbread PLC2,052.00 GBX-1.01

About Author

Rodney Hobson

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

Audience Confirmation


By clicking 'accept' I acknowledge that this website uses cookies and other technologies to tailor my experience and understand how I and other visitors use our site. See 'Cookie Consent' for more detail.

  • Other Morningstar Websites
© Copyright 2020 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy        Cookies