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Battle to replace Suez chief and chairman heats up
Tensions rise over who to appoint at the top of French water and waste company
Suez is gearing up to appoint a new chief executive and chairman as the French water and waste company comes under pressure from activists and rivals looking to take advantage of its faltering share price.
The group’s current chief executive and chairman — Jean-Louis Chaussade and Gérard Mestrallet, respectively — will leave their current roles next May due to statutory age limits.
The battle to replace them has grown heated, according to people familiar with the matter, and tensions may come to a head at a board meeting planned for Thursday.
Isabelle Kocher’s Engie, the largest shareholder in Suez with a 32 per cent stake, is at odds with Mr Mestrallet, who until recently was chairman of the French energy utility and before that Ms Kocher’s predecessor as chief executive.
The relationship between Ms Kocher and Mr Mestrallet has been strained in recent years and is under renewed pressure over the decision of who to put at the top of Suez.
“There's clearly some scenario where there will be a clash before or during the board meeting between the Mestrallet camp and the Kocher camp, which is more than unhelpful,” said one person close to the situation. “These things [the appointment of a new leadership team] should be a positive event for Suez . . . all the more so since the company is in a vulnerable state.”
Suez shares have fallen almost 20 per cent in the year to date, having never really recovered from a profit warning in January. The group is also under pressure from activist investor Amber Capital, which bought about 1 per cent of the company earlier this year and is pushing it to sell some water assets.
More broadly, a merger with larger French rival Veolia has long been mooted, even if it would require approval from competition authorities and involve disposals in France. Mr Chaussade has said he thinks such a merger would destroy value.
Ahead of leaving the company, Mr Mestrallet is pushing for Mr Chaussade to move from the chief executive position to the chairmanship. An external candidate for chief executive would help his argument that Mr Chaussade provides needed continuity — something some investors are wary of given Suez’s recent performance.
But it is Engie that is likely to have the largest say. People close to the energy group argue that it would be better for Suez to have a clean start, and that having a former chief executive as chairman risks hampering a new CEO’s ability to transform its performance.
An internal candidate for chief executive is the most probable outcome if Engie gets its way, according to people familiar with the process. Jean-Marc Boursier, chief financial officer, Marie-Ange Debon, head of France, and Bertrand Camus, who looks after much of the company’s international operations, are in the running.
Having an Engie appointee as chairman would also strengthen the utility’s hand as it decides what to do with Suez in the longer term. Pierre Mongin, a senior Engie executive who sits on the Suez board, is a prominent candidate.
Engie gave some clarity as to its wider intentions for Suez earlier this month when it said it wanted to “actively support” its development “by maintaining its current level of ownership” following months of speculation about a possible stake increase or a sale.
But many investors felt that statement did not give enough clarity about its intentions and it must decide what it wants to do longer term. Engie itself is coming to the end of one strategic plan and will present a new one in February.
“A bad outcome at Suez would also be a bad outcome for Engie,” said one Paris banker. “If Engie doesn’t control the decision making chain down to Suez, the whole thing will become painful.”
Suez, Engie and Mr Mestrallet declined to comment.
Winnebago beats by $0.03, beats on revs
- Reports Q1 (Nov) earnings of $0.70 per share, $0.03 better than the S&P Capital IQ Consensus of $0.67; revenues rose 9.7% year/year to $493.65 mln vs the $482.96 mln S&P Capital IQ Consensus.
- Gross profit margin increased 40 basis points in the quarter, driven by favorable business mix due to the strong growth in the Towable segment and improved margins in the Motorhome segment.
- In the first quarter, revenues for the Motorhome segment were $181.3 million, down 3.6% from the previous year.
- Revenues for the Towable segment were $292.8 million for the first quarter, up 12.8% over the prior year, driven by continued strong organic unit growth across the Grand Design RV branded line and pricing.
General Mills beats by $0.04, misses on revs; reaffirms FY19 EPS guidance
* Reports Q2 (Nov) earnings of $0.85 per share, excluding non-recurring items, $0.04 better than the S&P Capital IQ Consensus of $0.81; revenues rose 5.0% year/year to $4.41 bln vs the $4.51 bln S&P Capital IQ Consensus.
* Gross margin decreased 20 basis points to 34.2 percent of net sales.
* Co reaffirms guidance for FY19, sees EPS of down 0-3% to ~$3.02-3.11 vs. $3.06 S&P Capital IQ Consensus; sees FY19 revs of 9-10% to $17.16-17.31 bln, may not be comparable to $17.06 bln S&P Capital IQ Consensus.
Eli Lilly reaffirms FY18 guidance; sees FY19 EPS above consensus
- Co reaffirms guidance for FY18 (Dec), sees EPS of $5.55-5.60 vs. $5.58 S&P Capital IQ Consensus; sees FY18 (Dec) revs of $24.3-24.5 bln vs. $24.41 bln S&P Capital IQ Consensus.
- Co issues upside guidance for FY19 (Dec), sees EPS of $5.90-6.00 vs. $5.77 S&P Capital IQ Consensus; sees FY19 (Dec) revs of $25.3-25.8 bln vs. $24.57 bln S&P Capital IQ Consensus. Gross margin as a percent of revenue rate is expected to be approximately 75.0 percent on a reported basis and 76.5 percent on a non-GAAP basis.
- Having launched 10 new medicines over the past five years, the company expects continued pipeline progress in 2019, including U.S. regulatory action for nasal glucagon for hypoglycemia and lasmiditan for acute migraine, as well as new indications for several medicines.
- The company has revised its 2020 minimum financial expectations and now expects at least 6 percent compound annual revenue growth from 2015 to 2020 for the full company, and at least 7 percent compound annual revenue growth for its human pharmaceutical business.
AVEO Oncology enters into Agreement with Novartis (NVS) regarding AVEO’s AV380 program
The AV380 Agreement provides for the continued transfer to AVEO of the preclinical, technical, manufacturing and other data and materials developed by Novartis, as well as cooperation regarding future regulatory filings by AVEO relating to the AV380 Program. The Agreement also provides that in order to support AVEO's further development of the AV380 Program, Novartis will (a) make a one-time payment to AVEO of $2.3 million on or before January 2, 2019, and (b) provide the AV380 drug supply, valued at approximately $4.0 million, to AVEO at no charge.
- AVEO intends to use the $2.3 million payment to cover the milestone obligation due in January 2019 to St. Vincent's Hospital Sydney Ltd. ("St. Vincent's") under AVEO's Amended and Restated License Agreement with St. Vincent's dated August 13, 2015, pursuant to which AVEO in-licensed certain of the intellectual property underlying the AV380 Program.
Pfizer, Glaxo to Combine Consumer-Health Businesses
Glaxo will hold a 68% stake and Pfizer will get the remaining 32%
Pfizer Inc. PFE -1.65% and GlaxoSmithKline GSK 0.05% PLC plan to combine their consumer-health units, and eventually spin off the joint venture—creating a global giant selling drugstore staples like Advil and Sensodyne toothpaste.
The deal announced Wednesday is an unexpected ending to a yearlong process by Pfizer to shed its consumer business, as it and other pharmaceutical companies focus more on higher-margin prescription-drugs. Glaxo has been pursuing the same focus, though has until now stayed committed to its consumer business, which its chief executive led before her promotion to the top job.
Glaxo will hold a 68% stake and Pfizer the remaining 32% of the new joint venture, which generated combined sales of $12.7 billion last year.
The British company’s investors welcomed the deal, sending Glaxo shares up 7% in early trading in London.
Glaxo said it expects to close the deal in the second half of 2019 and that it intends to separate the joint venture within three years of closing via a listing on the U.K. stock market.
The deal will free up both companies to concentrate on prescription medicines, which tend to be more profitable, though higher risk. Companies have used the steady revenue of consumer drugs to insulate them from the sometimes boom and bust cycles of developing the next blockbuster medicine. For Glaxo, that role will fall to the vaccines business—which tends to generate steadier revenue flows—after it sheds the consumer-health venture. Pfizer sells vaccines too, as well as generic drugs.
For Glaxo the combination builds on its buyout of Novartis AG’s stake in a previous health-care joint venture, a $13 billion deal that was announced earlier in the year. The new business will boost cash flow, allowing it to strengthen its pharmaceuticals division through increased research investment, Glaxo said.
Glaxo Chief Executive Emma Walmsley said the deal would allow it to create a new pharmaceuticals and vaccines company, with its research and development efforts focused on science related to the immune system, genetics and advanced technologies.