Arjo chief quits in radical revamp

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The Independent Online
ARJO WIGGINS Appleton yesterday announced a radical shakeup that saw the troubled paper maker part company with its chief executive, split into three divisions and hint that it would be willing to entertain offers for two of them.

Under the restructuring, which is designed to revive the group's flagging share price, Arjo will abandon its geographical structure in favour of three industrial divisions organised around its carbonless and thermal paper, speciality and coated paper, and merchanting divisions.

Arjo said that as a result it no longer needed a group chief executive, so Phillippe Beylier had agreed to step down. Mr Beylier, chief executive for less than two years, was on a two-year contract and is expected to receive a payoff of more than pounds 800,000. Ken Minton, the non-executive chairman who designed the new structure, will take on a full-time role.

Meanwhile Luca Paveri-Fontana, a non-executive director, will also take on an executive role in a sign that Ifil, the Italian holding company controlled by the Agnelli family that is Arjo's main shareholder, is taking a more active role in the company.

"We must achieve value for shareholders," Mr Minton said. "To achieve this we must organise the business in a different way."

The restructuring will see Arjo combine its operations in Europe and the United States to create two international paper divisions. Arjo said the merger would cut costs, although it gave no indication of savings or job losses.

Mr Minton hinted that in the long term Arjo wanted to concentrate on its speciality and coated papers division. Meanwhile the carbonless and thermal unit, which supplies credit-card slips and fax paper, could be sold. "We will equip ourselves to take the value from that business sooner or later," Mr Minton said. He also hinted that the merchanting division could be merged with a rival.

City observers said the shakeup would allow investors better to judge the value of Arjo's component parts. The announcement was greeted with a 5.5p rise in the share price to 115p.Six months ago the shares were at 254p.

Mr Minton said the integration between the various parts of the company had been "somewhat limited" since 1990, when Arjo was created by the merger of French, British and American paper makers. But he stressed that the business would now be run on an international basis and that each division would have to justify new investments by showing they could earn a return in excess of their cost of capital.