De La Rue's hire from MicroFocus plays fast and loose with the rules

REUTERS

2 September 2019

It’s a long time since De La Rue was a licence to print money. The maker of banknotes has been poorly managed for years, becoming an also-ran in an industry where it could have been a consolidator, bulking up and buying out rivals.

In 2011, when that was a real prospect, the board rejected a takeover at 935p a share. Today it struggles to stay much above 200p.

Chief executive Martin Sutherland was booted out in May and today it hired a new chairman in Micro Focus’s Kevin Loosemore to navigate a way out of the swamp.

A controversial hire, to say the least.

Loosemore built Micro into a FTSE 100 giant by buying lots of small software businesses and integrating them brilliantly. All went well until he bought a giant chunk of Hewlett-Packard and got indigestion.

The latest in a string of profit warnings last week swiped nearly a third from Micro’s share price. With private equity firms almost certainly circling, a strategic review looms.

In other words, Loosemore has his hands full. And he is no backseat driver at Micro. Defying the convention blocking executives becoming chairmen, he wears both hats, by all accounts running the business and terrifying his non-executives into bowing to his will.

No conventional board at a troubled business would accept a senior executive taking on another turnaround like De La Rue. But when you’re a major shareholder, a top exec and a chairman, you can do what you like.

Hopefully he’ll buy a chunk of De La Rue shares as a vote of confidence. He could use some of the £12 million he made selling Micro stock before last week’s profit warning.

But even if he did, shareholders in both companies deserve better.

MORE ABOUT

Overboarding