Adidas has ended its "year-long hunt" for a new CEO by "poaching" German company Henkel CEO Kasper Rorsted to succeed its veteran leader, Herbert Hainer, according to James Shotter of the FINANCIAL TIMES. Rorsted -- who will be succeeded at Henkel by Hans van Bylen -- will join adidas’s exec board at the beginning of August "before taking over the top job at the beginning of October." Shares in adidas leapt almost 11% after the announcement on Monday morning before falling back, "and investors were quick to give their backing to the appointment of the 53-year-old Dane," who has run Henkel since '08. Ingo Speich, a portfolio manager at Union Investment, which is one of adidas’s 20 largest shareholders, said, "It’s a very, very good decision." Investors, however, "remain concerned that the company is not as profitable as it should be, as well as wondering whether it should keep all of its portfolio of brands." Speich: "The absolute priority for Rorsted will be to improve adidas’s profitability, they have to get their margins up. The good thing is that he has experience of carrying out exactly this sort of optimization at Henkel" (FT, 1/18). BLOOMBERG's Jarvis & Ricadela reported like Hainer, Rorsted "is stepping down early from his role, sending Adidas shares soaring and Henkel slumping." Exane BNP Paribas analyst Graham Renwick said, "This is a significant positive for adidas and the investment case." He described Rorsted as "a perfect fit." The new CEO "faces a tough task to revive growth" at adidas, which has been "losing ground" to industry leader Nike, as well as newer competitors like Under Armour (BLOOMBERG, 1/18).
SURPRISING MOVE: In N.Y., Houston-Waesch reported Bernstein analyst Andrew Wood called Rorsted’s switch to adidas "a surprise." Wood: "Given Rorsted’s success at Henkel, we are sure there was -- or would have been -- no shortage of offers open to him, so the news of that he is to become adidas CEO is somewhat of a surprise given adidas is half the size of Henkel." Henkel shares dropped nearly 6% early Monday. Earlier Monday, Henkel said its supervisory board and shareholder committee "had unanimously agreed" to Rorsted’s request to prematurely terminate his contract as CEO (WALL STREET JOURNAL, 1/18). REUTERS' Emma Thomasson reported investors had hoped adidas "would appoint an external candidate, believing an outsider might be more likely to take tough decisions to boost profitability and potentially sell more non-core businesses, such as fitness brand Reebok." Since Rorsted took over at Henkel in '08, shares in the maker of Schwarzkopf hair care products and Loctite glue have "more than tripled, while its annual sales have grown by more than a third" to around $19.6B estimated for '15 (REUTERS, 1/18). Adidas BOD Chair Igor Landau indicated that Rorsted was "'the perfect candidate' due to extensive international experience at Oracle, Compaq and Hewlett Packard, in addition to eight years heading Henkel" (AP, 1/18).
