GSK Merger Communications

1
GSK Merger Communications

• Elaine Macfarlane
• 12th November 2003

2
Overview

• Merger communications structure - macro
• Internal communications objectives, structure etc
• The merger process
• Managing delays
• Launch day
• Post-merger considerations
• Post-merger deliverables

3
Communications Objectives

• To ensure smooth transition to GSK from GW/SB
• To build rapid awareness of GSK identity and tone
• To engage and unite all audiences in support of
  GSK
• To generate shareholder confidence
• Adhere to merger communications principles
• -honest, open, timely communication
• -ensure consistent, controlled and aligned
  communication across and outside both companies,
  all audiences

4
Scope

• Internal and External Communications
• Pre-closure
• Day One (first day of GSK share trading)
• Official Launch event(s) (assuming official
  launch is on different date to Day One)
• Post-launch communications
• Audiences Employee, Media, Govt, Investor

5
Communications Strategy

• Maximise communications opportunities through
  support/co-ordination by professional
  communicators
• Ensure consistency of core messages and tactics
  regarding the newly-merged company
• Anticipate negative events and plan to address
  appropriately

6
Key Issues

• Avoid duplication of effort/waste of resources
  internally
• Reduce risk of internal/external event clash
  (e.g., announcement of site closure on same day
  as analysts meeting forecasting high earnings
  growth)
• Ensure visibility of senior management

7
Communications Platform
Integration Planning Committee
Co-ordination Team
JF/EM
Communications Platform
Corporate Identity
External Web
PC/BJ
DB/PC
GP/JH
Patient Groups
Community
Media
Government
Employees
Investors/ Analysts
CS/MD
DB/SdS
CK/RJ
LS/MS
JY/JS
NP/MH
8
Scope of internal communications

• Define and adhere to integration principles
• Define integration structure and role of task
  forces and functional support teams
• High level timeframe for integration process (and
  schematic)
• Appointments and selection process/decisions
• Integration Planning Committee decisions
  (progress)
• Launch Day planning
• Cultural framework

9
Internal Communications Strategy

• Maintain focus on ongoing business
• Establish and apply communications principles
• Communicate frequently, using both existing and
  new communications channels
• Co-ordinate communications across businesses to
  ensure consistency of message
• Ensure comprehensive communications preparation
  ahead of major events
• Minimise time between taking and communicating
  decisions to avoid leaks
• Anticipate changes in morale over course of
  integration and plan communications accordingly

10
Transition Curve
Enthusiasm
Trusting
Denial
Excitement
Refocus
Anxiety
Relief/Anxiety
Shock
Hopeful/Skeptical
Confusion
Impatience
Resignation
Acceptance
Anger
Realization of Loss
Approach-Avoidance
High Stress
Undirected Energy
Conflict
Creativity
Accept
Engage
11
Key Issues

• Demand for information increases dramatically
  during mergers
• Employees are interested in information they view
  as relevant to their situation - ME, ME, ME!!!
• Regular communications are important
• if no new news, communicate progress and
  expected date for decision-making
• In the absence of information, gaps are filled
  with rumour
• credibility/integrity paramount

12
Integration Management structure
IntegrationPlanningCommittee
Integration team
Task Forces line/execution (geographic and
functions)
Functional Support Teams (staff/advisory)
Special issue teams
To address integration issues that cut
across task force boundaries (e.g. facilities)
To close the deal To provide joint
specialist advice for the task forces (HR,
finance, legal, IT, communications)
To plan the integration within each part of the
business and (post closure) to implement it
13
Communications process
Integration Planning Committee
Integration Team
Communications
Task Forces
Functional Support Teams
Special Issue Teams
Communications
Communications
Communications

• All communications focussed to capture and
  co-ordinate issues across the entire integration
  process
• All TF, FST, SIT communication channelled through
  Integration Team communicators
• Integration Team communicators managed the
  information flow through to IPC

14
Task Force Communications

• Communications managers appointed for major Task
  Forces
• Communications guidelines issued to all Task
  Force members via Integration Team
• Guidelines, approval process and approval
  checklist issued to all Task Force communicators
• Key role of Task Force communications
• - to ensure timely update of Task Force
  progress , consistent at local and global level
• - assess morale within local functions and
  countries

15
Approvals process for merger-related
communications
Identify communications issues
TF, FST, SIT
TF, FST, SIT
Integration Team
Assess communication, direct and drive process
Communication FST
Create communications outputs
Approval
Coordinate issue date and release
Issue
16
What could not be communicated broadly

• Information/status of regulatory submission and
  shareholder documentation
• Synergy targets
• Option details, incentives, remuneration and
  severance
• Content of charters
• Agenda items for IPC meetings

17
A 4-phase integration process
About 2 months
About 1.5 months
About 2.5 months
Summer 2000

2. Information gathering and option generation
3. Design and decision making
4. Implementation
1. Direction setting
Feb 1
Develop shared understanding of the two
businesses Define high level organisational
structure/processes/ roles
Develop deeper understanding of the two
businesses Identify issues Generate hypotheses
for resolution
Develop detailed integration plan
Begin sequenced implementation
The timings were dependent on regulatory and
shareholder approvals.
18
Broad communications over course of integration

2
3
4
Phase 1
Feb
Mar
Apr
June
May
July
Aug
Announcements
Website planning preparation
Corporate identity planning
Task Force communications
emerge newsletter
Openline feedback
Top level organisational structure/appointments1
Major event communications planning2
Launch preparation
1. Phase I TF outputs mid-April 2. E.g., US/UK HQ
locations, site closures, headcount reductions
Scheme documents
19
Closure DelayKey Issues Raised

• Implementation plans
• Effect on share price
• Appointments process
• -progress on next level appointments?
• -leavers (when can they go?)
• Increased likelihood of resignations (through
  ongoing anxiety)
• Paralysis leading to fall in performance

20
Closure DelayKey Issues Raised (cont.)

• Timing/impact on share option decisions
• Knock-on effect on launch events
• New corporate ID more likely to leak
• How/when to communicate externally

21
Launch Communications
To develop the mission and vision for GSK
Launch Implementation Team
To oversee the launch communication process and
plans
Game Plan
Day One
Launch Day
Business Review Day
To plan and develop the RD/Business Review Day
to launch GSK to analysts and selected media
To plan and develop the activities for internal
launch of GSK including satellite links and a new
GSK video
To plan and develop the Day One activities to
mark the birth of GSK including first displays of
new corporate identity
22
Day One/Launch Day materials

• Spirit of GSK brochure (culture framework)
• Heritage brochure
• Unveiling of GSK brand identity
• Global satellite broadcast
• Press advertising
• CEO Home Page
• GSK intranet/internet (internal global news
  service)
• Launch video

23
Post merger considerations

• Maintain visibility of senior management
• Maintain frequency of communications (senior
  managers are ahead of the change curve)
• Global vs. regional vs. local communications
• Develop mixed media communications
• senior managers mostly e-mail
• middle/junior staff on-line
• manufacturing/International staff face-to-face
• Managing leavers

24
Post-merger considerations (cont.)

• Distribution database
• Communications networks
• Maintaining integrity of corporate identity
• Retiree publication strategy

25
Post-merger deliverables

• Communications guidelines
• New company publication (now also on-line)
• Senior management e-mail cascade system
• Corporate Executive Team reports
• Policy communication (compliance)
• Expanded CEO Home Page
• US/UK-specific news/networks
• Corporate calendar
• On-line communicators network (comnet)

26
Post-merger deliverables (cont.)

• Ambassador programme
• Behind the News
• Designated site communicators for multi-function
  sites/HQs

27
Appendix
28
Integration principles

• What are integration principles?
• A set of guidelines outlining how we will work
  and behave throughout the integration process
• Why do we need them?
• To align and focus all activities related to the
  integration, measured against a common standard
• How will they be used?
• To guide the process and serve as a benchmark for
  decisions and actions

29
Our integration principles

• We will . . .
• Respect the history, culture, people and
  processes of both companies.
• Adopt an objective, transparent, and timely
  decision-making process.
• Identify and retain the people and practices best
  suited to running the business through an open,
  fair and impartial process.
• Communicate in an honest, open, timely and
  two-way manner as appropriate.

30
The integration management structure

• The integration management structure will consist
  of Task Forces, Functional Support Teams and
  Special Issue Teams which will report to the IPC.
  
• Some of these have been defined for Phase I and
  others will be identified as the integration
  process progresses.
• The Integration Team will co-ordinate and manage
  the integration process. BCG will provide
  consultancy support.

31
Appointment and selection process

• The appointment and selection process is being
  defined
• Spencer Stuart has been selected as the HR
  consultants for the Integration
• A briefing pack for managers on the selection
  process for senior appointments will be issued
  followed by a general notice to all staff
• A letter and QA will be sent to first line
  reports of EC and CMT members plus other key execs

32
Key communications points

• A merger newsletter will be launched later this
  month to support the employee communication
  process
• The IPC has committed to communicate decisions in
  a timely manner and deliver information
  simultaneously to employees of both companies
• The only official information on merger process
  and decisions is from the IPC or its designated
  communicators