Platform Specialty Products on Wednesday hired Rakesh Sachdev, the former head of Sigma Aldrich, as its new CEO. The appointment comes amid a troubled run for Platform. In October, its former CEO Dan Leever stepped down amid disagreements with chairman Martin E. Franklin. The company has also twice slashed earnings guidance this year due to a strengthening of U.S. dollar and a souring of key agricultural end markets.
Platform's management change and its falling guidance have weighed on its share price, while also raising concern about its rapid pace of acquisitions. West Palm Beach, Florida-based Platform was formed as a special purpose acquisition vehicle focusing on agriculture and specialty chemicals. In recent years it acquired businesses such as MacDermid, Agriphar Group, Arysta, OM Group and Alent, building up operations that are expected to earn as much as $570 million in EBITDA this year.
However, as some chemicals and agriculture end markets have soured, investors have taken a cautious stance on Platform. It's $3.4 billion debt load and significant remaining work in integrating acquired businesses are a particular concern. According to Franklin, former CEO Leever wasn't the right guy to drive consolidation efforts and help meet synergy targets. However, Sachdev's experience at Sigma Aldrich perfectly fits the bill.
Sigma Aldrich was a strong performing diversified chemicals and bio-sciences company and Sachdev led its $17 billion sale to
Franklin and Sachdev spoke to FORBES on Wednesday evening to discuss the issues that have weighed on Platform and how they expect to manage the business going forward.
FORBES: Rakesh is coming in to replace Dan Leever. What didn't work with Dan?
Franklin: We made a series of acquisitions and we bought a number of companies that had very different cultures. It was very clear that the approach Dan Leever had as a CEO in building MacDermid was very different to the management challenge of integrating multiple companies with different cultures. This was a mutual decision with Dan and he understood it. We weren’t getting to where we needed operationally and we both agreed we needed to make a change.
FORBES: Platform shares are down over 40% this year. Was the company too acquisitive, do you regret any decisions?
I am not one who regrets, I am someone who is always learning. We’ve bought great businesses, we have got a balanced portfolio. We will rebuild relatively quickly, in my view, to regain momentum.
There is no question that with hindsight foreign currency fluctuations have been far more acute than we would have imagined. Agriculture is on a low. But we like the business, we like the space and we like the long-term assets we have. If you are in it for the long-term, so what if you have a downturn? We are handing Rakesh an extraordinary portfolio of businesses that are the fifth avenue real estate of their areas.
FORBES to Rakesh Sadchev. What appealed to you at Platform, especially coming so quickly after Sigma Aldrich's sale?
Sadchev: I think Platform is in a great space even though there are headwinds in the ag business. I think the long-term outlook for the ag business is phenomenal given what is happening in the world. The specialty chemical business, particularly if you are not in the commodity business and you find the right niche, is also very attractive.
Platform owns some very good companies, the real opportunity now is for us to integrate them. I also think there are some real opportunities for these companies to help each other. One of the things we did at Sigma Aldrich is we turned it from a fabulous product led company to a customer led company. We changed the lens of the company to really understand what the customer wanted and it really opened up opportunities for us. My plan is certainly to strive to do the same thing at Platform.
FORBES to Franklin: Bill Ackman said in his quarterly letter your sale of
Franklin: I like that Bill is telling me what I should be doing through letters you get to read. I am having dinner with Bill tonight. I’ll make sure he is very careful what he puts in his letters.
The truth is I think it is very likely that I will take a role that will have more time involved with Platform. At the end of the day, my relationship with Jarden CEO James Lille has been one of a great partnership where I was really able to cover bases for him when needed. I hope to do that with Rajesh. From the start, the chemistry is the same chemistry I had with Jim.
Definitely, the Jarden deal is like sending your kid off to college. I am still going to be involved, but from the outside looking in. So that will give me capacity to help.
FORBES to Sadchev: What is the strategy for 2016. Are acquisitions on hold given where the market is?
Sadchev: Our focus is to execute and bring the synergies together but we are going to be opportunistic. We are going to look for opportunities for organic growth and for inorganic growth. But safe to say we are not rushing out. We’ve got several companies to digest and bring forth the fruits of those acquisitions. But we are not going to turn a blind eye to the right opportunity.
FORBES: How does consolidation, for instance Dow Chemicals and DuPont, impact Platform?
Sadchev: Consolidation is going to continue to happen. When I think about coming from Sigma Aldrich there was always consolidation taking place in our space. Whenever there is consolidation there is always opportunity and it arises in many different ways. For instance, it opens up new markets when the big guys are trying to digest these large acquisitions. Consolidation is going to continue to happen and we are going to capitalize on that one way or the other.
