September 8, 2010 / 1:19 PM / 9 years ago

UPDATE 3-Glaxo hires Goldman Sachs banker as new CFO

* Julian Heslop to retire in March 2011

* New hire Dingemans led Goldman’s European M&A unit

* Glaxo says strategy unchanged, still eschews mega-mergers

* Goldman says no immediate plans to name direct replacement

* Glaxo shares end up 0.5 percent, in line with sector

(Adds CFO not directly responsible for M&A, Dingemans comment, closing shares)

By Ben Hirschler and Paul Sandle

LONDON, Sept 8 (Reuters) - Drugmaker GlaxoSmithKline Plc (GSK.L) insisted there would be no change to its cautious stance on deal-making after hiring one of Europe’s top M&A bankers as its finance chief.

Goldman Sachs (GS.N) investment banker Simon Dingemans, 47, will succeed Chief Financial Officer Julian Heslop, 57, when he retires next March, GlaxoSmithKline said on Wednesday.

Chief Executive Andrew Witty said the appointment reflected a need for Glaxo to operate with both creativity and continued financial discipline.

“Simon will bring valuable experience and capability to support us in our strategy to grow and diversify GSK’s business through organic means and bolt-on acquisitions,” he said.

Witty wants to diversify Britain’s biggest drugmaker by expanding further into areas such as consumer healthcare and emerging markets in a bid to reduce reliance on sales of conventional prescription medicines in Western markets.

The strategy requires smart acquisitions but Witty has said consistently he does not see a role for mega-mergers, and the company emphasised this was unchanged.

“The strategy remains exactly the same,” said spokeswoman Alex Harrison. “We’re not interested in the old-style M&A.”

She added that Chief Strategy Officer David Redfern, rather than the group’s CFO, had primary responsibility for mergers and acquisitions (M&A), with a direct reporting line to Witty. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For a Breakingviews comment please double click on [ID:nN08105542] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

CREATIVE APPROACH

Dominic Valder, an analyst at Evolution Securities, said Dingemans’ appointment could lead to more unconventional deal-making by the London-based group.

“Appointing a M&A banker will not change Glaxo’s opposition to mega-mergers, however it could herald a more creative approach to other financial structures, like partnerships, spin-offs or financing methods,” he said.

Glaxo shares ended up 0.5 percent, broadly in line with a 0.8 percent advance in the European drugs sector .SXDP.

Dingemans is the second senior executive to move from Goldman to head the finance department of a major European drugmaker recently, following the appointment of Jon Symonds as CFO at Novartis NOVN.VX from February 2010.

Dingemans has more than 25 years experience in investment banking and most recently led Goldman Sachs’ European M&A business, where he has worked with Glaxo for many years. He helped establish its ViiV Healthcare joint venture in HIV medicine with Pfizer (PFE.N).

A Goldman spokeswoman said the bank had no immediate plans to name a direct replacement.

Dingemans, who said he had been keen to join a global company as CFO for some time, was one of three key partner managing directors at Goldman in London advising companies on corporate finance and mergers. The others are Karen Cook, who serves as a non-executive director at Tesco (TSCO.L), and natural-resources specialist Julian Metherell.

His other big healthcare deals include advising Alliance Boots [AB.UL], Britain’s biggest pharmacy chain, on its 2007 takeover by KKR (KKR.N). The deal, worth 12.4 billion pounds ($19 billion) including debt, was Europe’s largest leveraged buyout.

Goldman ranks top for global announced M&A this year, with $384 billion of deals, and fifth for deals targeting European companies, with $51.7 billion, according to Thomson Reuters data. (Additional reporting by Victoria Howley and Quentin Webb; Editing by Elaine Hardcastle and David Holmes) ($1=.6469 Pound)

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