Hershey Co. (HSY) Chief Executive Officer David West is departing to head Del Monte Foods Co. after clashing last year with the Trust that controls the maker of Kisses candy.
Operations chief John Bilbrey will take the helm temporarily, the Hershey, Pennsylvania-based company said today in a statement. The board will “work quickly” to find a permanent replacement, Hershey said.
Bilbrey became operations chief last year, and helped establish Hershey brand products around the world, according to the statement. The company got about 15 percent of its $5.7 billion in revenue from outside the U.S. last year.
“This is a significant negative development for Hershey given high loyalty to former CEO West throughout the organization,” Eric Katzman, an analyst with Deutsche Bank in New York, wrote in a note to clients today. “It will be difficult for Hershey to recruit as capable a CEO near to intermediate term.”
Hershey will lack leadership during a difficult period including increased competition and high costs for ingredients, wrote Katzman, who rates the shares a “hold.”
Hershey shares fell $1.62 to $55.46 at 11:08 a.m. today in New York Stock Exchange composite trading. They had gained 21 percent this year before today.
West and the Hershey Trust clashed in 2009 and 2010 over how to respond to Kraft Foods Inc. (KFT)’s bid for Cadbury Plc. Members of the Trust pushed an aggressive counter-offer, while West urged caution, people familiar with the matter said last year. Kraft completed the 11.7 billion pound ($18.9 billion) acquisition last year.
Hershey lost the title of biggest U.S. confectionery maker with Mars Inc.’s $23 billion takeover of Wm. Wrigley Jr. Co. in 2008.
Company founder Milton Hershey gave the Trust his stock in 1918 to fund a school for disadvantaged children. The Trust held 30 percent of the economic value of Hershey and 80 percent of the voting power.
The Trust removed six Hershey directors in 2007, saying it was displeased with the company’s performance. That year then- CEO Richard Lenny retired, and West was elevated from chief operating officer to succeed him.
West, 48, will join San Francisco-based Del Monte Foods Aug. 15, the company said today in a statement.
“After 10 years with the company, Mr. West felt it was the right time to take on the next challenge,” said Kirk Saville, a spokesman for Hershey. He declined to elaborate on the reasons for West’s departure.
A group led by KKR & Co. bought Del Monte Foods in March for about $5 billion, including debt. The company’s pet-food brands include Meow Mix, Kibbles ‘n Bits and Milk Bone dog treats, while the consumer products division sells fruits, vegetables and broth products.
To contact the reporter on this story: Cotten Timberlake in Washington at email@example.com
To contact the editor responsible for this story: Robin Ajello at firstname.lastname@example.org