CHEWING GUM A Wrigley family member no longer holds post of CEO
Wrigley shares jump 14 percent on the executive announcement.
CHICAGO (AP) -- Wm. Wrigley Jr. Co. turned over the leadership of its chewing-gum empire to an outsider for the first time after four generations in the Wrigley family, naming ex-Nike Inc. CEO William Perez on Monday to replace Bill Wrigley Jr. as chief executive after a turbulent past year.
Wrigley will remain chairman of the 114-year-old company, a job he has held along with the chief executive's role since his father, William Wrigley, died in 1999.
The surprise announcement came as Wrigley reported a 14 percent increase in third-quarter earnings to 148 million, lifted by a sales rise in Asia, to exceed Wall Street's expectations.
Its shares jumped 6.40, or 13.7 percent, to 53.23 in trading on the New York Stock Exchange.
The gum, candy and mint manufacturer's once high-flying stock had declined sharply since last year when it spent more than 1.4 billion to buy Life Savers, Altoids and other businesses from Kraft Foods Inc. -- an expensive, debt-funded acquisition that it has struggled to absorb.
Bill Wrigley shook up the top management team in April as Chief Financial Officer Ronald Waters departed, but generating profits from the new businesses has continued to prove difficult.
He said it was his recommendation to the board that Perez be brought in as CEO.
"To continue to effectively drive our dynamic and highly competitive global company, I firmly believe this is the right time to divide the top leadership responsibilities between two people, particularly given today's commercial and governance climate," Wrigley said.
The 59-year-old Perez lasted barely a year as an outsider CEO at Nike, resigning in January over differences with Phil Knight, the company's co-founder. Industry observers voiced optimism he will be able to handle the role better at the world's largest chewing-gum manufacturer, working under a different billionaire chairman, after failing to fit into the culture of the biggest athletic shoe maker.
Perez previously spent 34 years, eight of them as CEO, at Wisconsin-based SC Johnson, which, like Wrigley, is a family-owned business that derives more than half its sales internationally. He also will join Wrigley's board of directors.
"An executive of Bill Perez's stature, with knowledge of the consumer markets and dealing with family-controlled companies is hard to find," said John McMillin of the Prudential Equity Group in a note to investors.
He suggested the choice of Perez may signal an interest in more deals ahead for Wrigley, which in 2002 narrowly failed in a bid to buy Hershey Co. for 12.5 billion.
Morningstar analyst Mitchell Corwin called the CEO switch a good move that should give investors more confidence.
"The missteps with the Kraft acquisition and heightened competitive environment demonstrated that the company could use a seasoned veteran to run the day-to-day operations," he said. "I think Bill Wrigley had the right strategic vision for the company, but acquisitions can be difficult, and the competitive environment is more intense today than it's ever been."