Alliance Boots and the ex-banker: Pessina’s most daring appointment
IT’S been quite a busy couple of days,” says the 67 year-old Stefano Pessina, in a somewhat understated sort of way.
The executive chairman of Alliance Boots was supposed to have spent the weekend by the sea in his native Italy before flying off to a conference in the US.
Instead, he’s in his financial PR firm’s offices in London explaining the reasons behind the hiring of a new chief executive for his private equity-backed group. And it’s not a particularly relaxing experience.
For it’s not any old chief executive he’s just hired. It’s a man who has most recently led one of the UK’s biggest banks to near collapse and into the arms of a rival. And Pessina’s group owns Boots, itself a national treasure.
If Pessina has cancelled some of his immediate plans, that’s because he’s now got some explaining to do. And it’s also because news of the hiring leaked out earlier than he would have liked it to. “I wasn’t planning to announce this until next week but I guess if we’d used a professional head-hunter we would have been in the newspapers every week.”
Pessina said he instead used the group’s informal contacts to conduct the job search and the man he chose, Andy Hornby, formerly of HBOS, would certainly have been known well enough by PR advisers, Finsbury, who acted for Lloyds TSB in the merger with its stricken rival.
“The thing that impressed me when I met Andy was that he was very low key and really humble. That was very important to us because we absolutely needed somebody to be a team player.
“I spoke many times with Andy and I tried to really understand what happened at HBOS. He was profoundly sorry about what had happened and recognised that he had been a fantastic retailer but had not been as fortunate in banking, especially in corporate banking.
“He made it clear to me that he wasn’t trying to blame anybody else for what had happened, especially on the corporate banking side, and he took full responsibility himself.
“But in the end he could have done things differently knowing that the outcome – because of the credit crunch – might have been more or less the same.”
Furthermore Pessina says he was impressed that Hornby, who has a retailing background with Asda, left all his money in the bank and even underwrote a capital increase when things were going horribly wrong.
The two men met each other several times over the past few weeks but Pessina says it wasn’t a decision he took on his own. “Many of my team have met him. It’s not a decision I took on my own. It’s a collegiate decision.
“Andy can accelerate our strategy. There are so many things to do. His skill and understanding of retail and management will be useful.”
Pessina says Hornby will work in the London office of the company where he will be boss to the heads of the company’s two main divisions, Ornella Barra of wholesale pharmaceuticals (and Pessina’s domestic partner of 27 years) and Alex Gourlay, head of the health and beauty business.
“The two chief execs of the divisions will keep all their influence and power, though,” says Pessina.
Since being taken over by Pessina and the private equity group Kohlberg Kravis Roberts (KKR) for £11bn in 2006, the group has been weathering the recession reasonably well. It recently reported a pre-tax profit of £13m, revenues were up 15.5 per cent at £20.5bn and there have been £100m of merger cost savings achieved ahead of schedule, though KKR has been forced to write down the value of its investment.
Hornby’s appointment will enable Pessina to stand back a little and do some strategic thinking. “I really need somebody to help me accelerate the development of the group,” he says, with what looks like a slight glint in his eye.
Recently he spoke of the appetite for doing “transformational deals”. At some point the group will almost certainly go public again, though Pessina says there is “no hurry” for this.
In the meantime there may be more mundane, but equally important, tasks ahead, such as growing the group’s sluggish online strategy.
“It’s true we’ve been a bit slow,” admits Pessina, “and I have to take the blame for this. It was one of the first things that I tried to implement but it has not been too successful so far. There have been some technical problems but I think we might be on the right track.”
In an aside he says: “We have always recognised our mistakes and immediately moved on.” Pessina’s followers will hope the Hornby hiring never falls into this category.
CV STEFANO PESSINA
CAREER: An engineer by profession, he established Alliance Sante in Italy in 1977.
Twenty years later he was appointed to the Alliance UniChem board when UniChem merged with Alliance Sante.
He was chief executive of Alliance UniChem for three years up until December 2004 before becoming executive deputy chairman.
In July 2007 he was appointed executive chairman of Alliance Boots having previously been executive deputy chairman.