ConvaTec has poached the chief executive of animal genetics group Genus to help lead the struggling medical equipment maker’s turnaround.
Karim Bitar will leave Genus on September 16 after eight years at the helm to join ConvaTec as its chief executive. Genus has started the search for his successor.
ConvaTec, which makes colostomy bags and wound dressings, has been without a permanent chief executive since last October when it announced the Paul Moraviec and issued a profit warning.
READ: ConvaTec announces resignation of chief executive as it issues profit warning
The company noted that shares in Genus have risen by 150% during Bitar’s tenure as chief executive.
ConvaTec said Bitar has led the transformation of Genus by creating three global business units and successfully expanding the company's presence in key emerging markets.
“He is an experienced and highly regarded leader with an excellent track record of delivering impressive results and transformational change within similar businesses,” ConvaTec chairman Christopher Gent said.
“The board and I are very confident that Karim is the right person to lead ConvaTec through the next stage of the company's development."
ConvaTec chairman and deputy chairman to step down
Following the appointment of Bitar, Gent and deputy chairman, Steve Holliday, will leave the company.
Gent will not seek re-election at the annual general meeting on May 9 while Holliday will resign from the board on March 31.
"Following the announcement of Karim Bitar's appointment as chief executive officer, both Steve and I have concluded that this is the right time to step down from the board of ConvaTec,” Gent said.
Interim chief executive, Rick Anderson, will temporarily become executive chairman until Bitar joins to help “maintain continuity within the senior leadership of the company during the transitional period”.
Once Bitar takes over, Anderson will become non-executive chairman until a permanent replacement is found for Gent.
Bitar said: “I am excited by the opportunity to lead ConvaTec to stronger and sustainable rates of profitable growth.
“ConvaTec has the potential to achieve market leadership across its franchises, by focusing on innovation and execution excellence and by leveraging its global presence."
ConvaTec has been hit by tough competition, leading it to issue two profit warnings last year and launch a US$150mln restructuring plan last month.
Peel Hunt upgrades ConvaTec to 'buy'
Peel Hunt upgraded its stance on ConvaTec to 'buy' from 'hold' and raised its target price to 230p from 150p.
"New CEO Karim Bitar's track record of investing to deliver transformation at global leader Genus bosus well for ConvaTec's nascent turnaround," the broker said.
"Though Mr Bitar will not land for six months, we think now is the time to become more positive on ConvaTec given: (i) Mr Bitar's loyal following among UK midcap investors; (ii) ConvaTec's transformation initiative is already underway; and (iii) 3%/6% dividend and free cash flow yields offer support in the interim."
Bitar leaves Genus in strong position, says Liberum
Liberum said Bitar has left Genus in a "strong strategic and financial position" from which it expects “substantial future growth”.
“Under his leadership, Genus has significantly enhanced its position as a global leader in animal genetics, growing earnings with a compound annual growth rate of 8% and driving a re-rating of its shares from a price-earnings ratio of c.20x to c.30x,” the broker said, reiterating a ‘buy’ rating and target price of 2,500p.
READ: City broker expects Genus to benefit from African swine fever ravaging southeast Asia
Liberum added: “There will, no doubt, be some investor regret that a successful CEO is moving on but Genus has a well-established wider management team and a clear strategy to which the Board is fully committed.
“We expect the CEO position to attract a high calibre of potential successors.
In morning trading, shares in Genus dropped 4.7% to 2,250p while ConvaTec shares gained 2.9% to 138p.