Chr. Hansen CEO Open to Buyout World After Calling Time as ChiefAndrew Noel
Chr. Hansen A/S’ Lars Frederiksen said he’s open to taking a role at a private equity firm as he considers his next move after ending an eight-year stint as chief executive officer of the yogurt cultures maker.
The 54-year-old, a board member of the Confederation of Danish Industry as well as investment firm Digevej Invest, said in a phone interview today he has no political ambitions and will focus on his board positions.
Frederiksen oversaw Chr. Hansen’s transition from a private-equity owned company to its subsequent listing on Copenhagen’s exchange in 2010. After reading John Helyar’s 1990 private-equity inspired book ‘Barbarians at the Gate,’ the CEO said he was initially sceptical about buyouts when PAI Partners beat a field of suitors to buy Chr. Hansen for about $1.5 billion in 2005. The experience turned out to be eye-opening.
“I have become a firm believer in private equity,” Frederiksen said. “What I saw was a structure focused around active ownership where the boards, the owners and the management were basically aligned.”
Frederiksen said he would prefer to work with companies that have high research and development budgets. Frederiksen said he fancies a change after spending his entire working life at Hoersholm, Denmark-based Chr. Hansen.
He is handing the reins to Cees de Jong, 51, the former chief operating officer of Dutch maker of biotechnology drug ingredients Crucell. Chr. Hansen’s direction is unlikely to change dramatically, yet its development into a life science company spanning food ingredients and biopharmaceutical ingredients will accelerate, Frederiksen said.
The CEO said he last year flagged to Chairman Ole Andersen that he may consider a career change in 2013. De Jong “brings a unique combined knowledge of ingredients and biopharmaceuticals,” Andersen said in a statement.
Frederiksen said life under PAI partners brought benefits, including honing techniques in managing cash and liquidity during the 2008 financial crisis, and sharpening the company’s business model. The IPO, where Chr. Hansen gained 10 percent in the first three days of trading, was another high point, he said. The shares have now more than doubled in value.
Private equity firms are also finding rich pickings among executives in the chemical industry as they seek to build out their skill base in a still fragmented industry. Utz-Hellmuth Felcht, the former CEO of Degussa, joined One Equity Partners, and Gunter von Au, the former head of Sued-Chemie bought by Clariant AG, has joined Advent International Corp.
Chr. Hansen attracted “huge” interest in 2005, with PAI one of about 26 bidders, Frederiksen said, adding that one-third of those were strategic companies. About eight bidders went through to the second round, in which the ratio of financial sponsors to companies was more even.
DuPont Co. acquired Chr. Hansen’s Danish competitor Danisco A/S for $7 billion in 2011. Royal DSM NV has spent about 1.8 billion euros ($2.4 billion) on acquiring assets in food-nutrition and ingredients.
“At the time of the PAI takeover, everyone was pointing the finger at the company, saying we were underperforming and that our owners didn’t want us,” said Frederiksen.
On its debut on Copenhagen’s stock exchange, the first trade in Chr. Hansen shares was at 96 kroner versus a 90-krone open, and the company “walked straight into” the benchmark C20 index, the CEO said.
“Right now I have no fixed plans,” Frederiksen said. “This move has been in the making for a year or so, at least in my mind. The idea is not to retire. I’m not going to be spending my time on the golf course.”