11 Companies in Need of a CEO (or Maybe a Buyer)
Wall Street Journal
Aug 20, 2014
Publicly traded companies don’t hang up “for sale” signs out in front of their corporate offices, so analysts and investors try to look for other clues.
One of them: A vacancy in the corner office.
Research firm Gordon Haskett publishes a closely-read newsletter with blow-by-blow accounts of what’s happening at companies that are or could be in play. This morning, the firm released a list of corporations where CEOs have said they’re leaving or are already out the door. Some of those companies, they say, could be potentially for sale.
One company on Gordon Haskett’s list, Dollar General Corp.DG +0.27%, has declared its intention to acquire rival Family Dollar Stores Inc.FDO +0.14% for $9 billion. But its CEO’s fate is different now. When Dollar General made its announcement, CEO Rick Dreiling reversed course and said he would stay at the helm through 2016.
While they’re not all takeover targets, here’s a look at 10 additional companies with CEO vacancies that Gordon Haskett is watching for possible developments:
Kennametal Inc.KMT -1.44%: On Tuesday, CEO Carlos Cardoso said he plans to retire by year-end. Shares of the toolmaker popped following the announcement. Gordon Haskett’s Don Bilson said the rally in Kennametal’s stock probably came from hopes for a strategic pivot by a new executive rather than a sale.
Ashland Inc.ASH +0.42%: In April, the specialty chemicals company’s CEO Jim O’Brien announced plans to retire by year-end. Ashland has been in the crosshairs of activist investor Jana Partners LLC, which disclosed a stake in April 2013. Mr. O’Brien’s successor is expected to wrestle with whether or not the company should spin off its Valvoline business, Gordon Haskett’s note says.
Cisco Systems CSCO +0.28%: Gordon Haskett notes that Cisco’s CEO John Chambers is 65. The research firm expects Mr. Chambers to announce his retirement shortly. “With that in mind, we view Cisco as a company operating without a named successor.” WSJ’s Heard on the Street recently reminded MoneyBeat readers that Cisco’s $50 billion war chest make it a “usual suspect” as a buyer for a host of possible deals, particularly in the cloud-computing sector.
ConAgra Foods Inc.CAG +0.41%: The packaged-foods company’s CEO, Gary Rodkin recently announced that he would retire in May 2015. ConAgra last year acquired Ralcorp Holdings Inc., another branded packaged food company, and Mr. Rodkin has admitted that the company has been difficult to restructure.
Darden Restaurants Inc.DRI -0.21%: On July 28, the company said its CEO, Clarence Otis, would leave his post by December 31 at the latest. The restaurant company has been under pressure from activist investors and recently closed the sale of Red Lobster. Activists are seeking to break up the company further.
EMC Corp.EMC -0.64%: Gordon Haskett notes that even though CEO Joe Tucci is expected to retire early next year, he has pushed off his retirement in the past. Activist investor Elliott Management Corp. has taken a stake in the company, and according to the WSJ, is planning to pressure the company to spin off its VMware unit or break up the company entirely.
International Paper Co.IP -1.07%: CEO John Faraci is expected to leave the company by February 2015. Gordon Haskett writes that President Mark Sutton looks like the “heir apparent” but the company has not formally announced a successor. In 2013, Mr. Faraci dismissed the idea that the company will be part of transformational deals as either a buyer or seller.
Rackspace Hosting Inc.RAX +1.29%: The company currently has an interim CEO and has hired Morgan Stanley MS +0.03% to explore its options. This week, activist investor Blue Harbor Group LP took a stake in the company. According to the WSJ, Blue Harbor thinks the cloud-computing firm should weigh multiple strategic options beyond just a sale.
Symantec Corp.SYMC +0.17%: Since the company’s CEO, Steve Bennett, was fired in March, its been run by an interim CEO and is expected to make further announcements by September. The company has seen a host of top executives leave in the past several years.
WellCare Health Plans Inc.WCG +0.79%: Gordon Haskett notes that the Medicaid insurer has been operating without a permanent CEO since November and said they expect that the company will attempt to sell itself before announcing a new one.