If Sir Andrew Witty is casting around for an epithet to sum up his tenure at GlaxoSmithKline, it would probably be: breaking up is hard to do.
Yesterday’s announcement that he will retire in 2017 was the City’s worst-kept secret, but it affords GSK the opportunity to contemplate the sort of radical change that tends to take place only during periods of leadership transition.
The company’s detractors argue that its disparate businesses – one focused on HIV treatments, another on consumer products, a third on vaccines – bear little resemblance to each other.
Witty’s fans – and there are some – argue the opposite, and that the benefits of GSK’s diversified yet focused structure are already visible.
Neil Woodford, the fund manager, has long been in the former camp, and has been increasingly bellicose in his views that a break-up is necessary to release value.
I would be surprised if, despite the company’s assertion that it will consider internal candidates for the top job, it doesn’t go elsewhere in the industry.
But if GSK chairman Sir Philip Hampton recruits an external candidate who then concludes that GSK is indeed better off in its current form, Woodford will have little choice but to sell out or shut up.
IS COUPE OFF HIS TROLLEY?
We all know the feeling: you wheel a trolley around the supermarket for an hour only to forget what you went in to pick up.
Is Mike Coupe in danger of experiencing buyer's amnesia on a larger scale? The Sainsbury’s chief executive and his City advisers have crafted a faddish case for owning Argos: the smaller chain’s general merchandise distribution expertise can be applied to the broader grocery business, they reason, an essential asset in a fast-changing retail world.
By tomorrow, Coupe must decide whether to increase a £1.3bn offer for Home Retail Group (HRG) – already trumped by South Africa’s Steinhoff. The Sainsbury’s chief has scope to raise his bid, but he shouldn’t. A takeover of Argos would solve few of Sainsbury’s entrenched strategic problems. This week’s trumpeting of a 0.1 per cent rise in fourth-quarter sales as a return to growth smacked of desperation. In other words, Coupe needs to focus on driving Sainsbury’s core business harder rather than relying on a distracting acquisition.
Secondly, Sainsbury’s balance sheet is too constrained to enter a bidding war for what its chief executive insists is not a must-do deal. Its reticence about a privately issued credit rating does not help instil confidence.
And depending upon the value of a deal, a takeover of HRG could constitute a class one transaction requiring the approval of shareholders. That would expose significant divisions among Coupe’s investors, raising wider questions about his leadership.
It’s an odd feeling to return your trolley without buying anything, but doing so represents Coupe’s best chance of enjoying a long stint as Sainsbury’s boss.
CANADIANS EYE S&W EXIT
Intriguing goings-on at Smith & Williamson, the privately held accountancy firm and wealth manager.
Almost a decade after it hired Panmure Gordon to handle a flotation that never came to pass, another - albeit more modest - ownership shake-up is in prospect.
Sources say that AGF, the Canadian asset manager which has plenty of domestic troubles to contend with, has decided to explore a sale of its interest in the British company.
AGF owns just 30 per cent of Smith & Williamson, but the search for a buyer for its stake may yet ignite a wider process, according to my mole.
A spokesman for the firm says only that it “is not for Smith & Williamson to comment on the intentions of individual shareholders”. Of course not.