DEFENCE equipment manufacturer Chemring yesterday announced the immediate resignation of chief executive David Price, amid its takeover talks with US private equity firm Carlyle.
Price will be replaced by Mark Papworth with immediate effect. The management shake-up, which sent shares into a tailspin yesterday, came as Carlyle is discussing a deal to take over £625m Chemring.
It is understood that Price, who has been with Chemring for seven years, was replaced to maximise the company’s position whatever the outcome from the bid will be. It is thought that the board felt Papworth was a better fit to lead Chemring through an uncertain economic climate.
Papworth, former chief executive officer of the gas turbines division at Wood Group, will begin his tenure on 5 November. Prior to Wood Group, Papworth held an executive role at Rolls-Royce Energy.
The FTSE 250 firm said of Papworth yesterday: “During his tenure at Wood Group he implemented and delivered a strategic review which resulted in a successful turnaround, improved manufacturing capabilities and
substantial improvements in profitability.”
Guy Brown at Oriel Securities said that the move could flag that the deal with Carlyle is “collapsing”.
“It would appear odd to appoint a new chief executive with the belief the group is going to be taken over within a matter of weeks,” he said.
The deadline for Carlyle bid talks, which has been extended twice until 9 November, could be moved beyond that to give Carlyle time to assess Chemring’s results due at the end of October, a source told City A.M.
“It is unlikely Carlyle will make a decision so soon after seeing Chemring’s numbers and just after the US elections,” they added.
Private equity house Carlyle first expressed an interest in Chemring in August. In the midst of negotiations, the defence equipment firm issued a profit warning, cutting its full year operating profit target by £15m due to a delay to production systems.
Chemring’s shares ended the day 8.69 per cent lower yesterday at 316p.