SAI Global shake-up as CEO forced out
Australian risk management and food auditor organisation SAI Global has terminated the employment of its CEO. At the same time, the Company has announced it is considering a proposal to be acquired by Pacific Equity Partners Pty Limited (PEP).
SAI Global is well known to Australian companies for its commercial database of Australian standards across various industry sectors, including the standards for food and horticultural products. SAI Global also has a major presence in food safety and risk auditing and certification services. It certifies products, systems and supply chains.
PEP is one of Australia’s leading private equity investor groups and has made significant investments in the food sector. The news of the PEP proposal to acquire SAI Global comes at a time when PEP is cashed up following the public float last week on the Australian Securities Exchange (ASX) of its equity-holding in the leading Australian caterer Spotless and the news last night of PEP’s agreement to sell leading ice cream manufacturing group Peters Ice Cream.
Termination of CEO due to ‘differences of opinion’ on Company’s direction
SAI Global, which has its Australian offices in Sydney, Melbourne, Brisbane, Adelaide and Perth, said it had appointed its current Non-Executive, Independent Chairman, Andrew Dutton, as Executive Chairman, effective immediately. Mr Dutton’s appointment followed the Board’s decision to serve notice of termination of employment to Chief Executive Officer, Mr Stephen Porges.
Mr Dutton said the decision to terminate Mr Porges’ contract of employment was reached after it had become clear that there were “fundamental differences of opinion” between him and the Board. The Company said differences primarily concerned both the detail and the pace of implementation of the Company’s strategic business improvement objectives.
“Last week, it became clear to the Board that we were unlikely to resolve the differences between the Non-executive Directors and the CEO regarding the changes required and the pace of those changes to deliver the business improvements that we are seeking over the short to medium term,” Mr Dutton said.
“As a result, the Board has determined that the course of action that is in the best interests of shareholders is to terminate Mr Porges’ employment with the Company,” Mr Dutton said.
Mr Dutton will serve as Executive Chairman until a suitable successor is identified and appointed.
“The Company has a commitment that it will provide an update on the progress towards our business improvement objectives at the time of the Company’s full year results this coming August”, Mr Dutton said.
SAI Global said Mr Dutton was “well placed” to take over executive leadership of the business and to drive completion of the business improvement plan. He has six years experience on the SAI Board, which the Company said provided him with a detailed understanding of the Company’s businesses and their markets. Mr Dutton’s executive career includes extensive experience in senior executive roles with multinational companies in both IT and Financial Services including CA Inc (formerly Computer Associates), Visa International, VM Ware Inc, BEA Systems and IBM.
Takeover proposal from PEP
Meanwhile, SAI Global said it was considering an unsolicited, indicative, conditional and non-binding acquisition proposal from PEP.
The Board of SAI has received an Indicative Proposal from PEP to acquire 100 per cent of the outstanding shares in SAI Global Limited through a recommended scheme of arrangement for an indicative price in the range of $5.10 to $5.25.
At this stage, SAI Global said its Board had not formed a view as to the merits of the Indicative Proposal. SAI Global said it was open to engaging with PEP to determine whether a binding proposal that was capable of being put to shareholders with the recommendation of the SAI Board, could be developed. SAI Global has appointed Macquarie Capital and Gilbert and Tobin to assist in this process.
The SAI Global Board cautioned that the Indicative Proposal was non-binding, conditional and subject to due diligence. It said there was no guarantee that a proposal capable of being put to shareholders would eventuate. SAI Global said its shareholders did not need to take any action in relation to the Indicative Proposal.
Meanwhile the Company advised that its previous guidance on underlying performance for FY14 was unchanged, that is, that FY14 underlying performance will be in line with that achieved in FY13.
However, it said that significant items before CEO transition costs were expected to amount to approximately $7 million and largely comprised costs associated with a reduction in headcount and consolidation of some offices, leading to cost savings from 2015.
SAI Global said it was continuing to work on opportunities to improve operational efficiencies and anticipated announcing further restructuring costs and benefits at the time of the full year results in August 2014.