Keurig Taps Pinnacle Foods Executive as CEO After JAB Buyoutby
Keurig Green Mountain Inc., which was taken private earlier this year by a JAB Holding Co.-led investor group, named Pinnacle Foods Inc. Chief Executive Officer Bob Gamgort as its next CEO.
Gamgort replaces Brian Kelley, who will become vice chairman of the board, Waterbury, Vermont-based Keurig said Wednesday in a statement. The changes are effective May 2.
The move is JAB’s first major change at the single-serve coffee company it bought for about $14 billion. The closely held investment firm, which manages the fortune of Austria’s billionaire Reimann family, has spent more than $30 billion in the past four years acquiring coffee companies in the U.S. and Europe to challenge global leader Nestle SA.
For Pinnacle’s investors, the loss of Gamgort was a blow. The shares fell as much as 12 percent to $40.43 in New York after his departure was announced, the biggest intraday drop since August.
Gamgort, known for acquiring struggling brands and turning them around, may be difficult for Pinnacle to replace, said Michael Halen, an analyst at Bloomberg Intelligence. Gamgort had embraced aggressive cost-cutting before private equity firm 3G Capital brought zero-based budgeting into vogue in the food industry, Halen noted.
“All these other companies are getting religion because 3G is out there putting pressure on them, but he’s been lean for years,” Halen said.
Pinnacle said it has started a search process to replace Gamgort and is evaluating internal and external candidates. The Parsippany, New Jersey-based company expects to complete the process in time for a “seamless transition.”