SkyePharma rebels hit by Whatman profits warning

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The Independent Online

A profits warning from Whatman, the filtration-paper company, dealt a blow yesterday to shareholder rebels at SkyePharma who want to install Whatman's chairman Bob Thian at the top of the ailing drugs firm.

Whatman has previously admitted that a lack of leadership since it chose "the wrong chief executive" by appointing Howard Kelly in 2004 had damaged sales and led to manufacturing targets being missed. The group then lost Tim Haines before he took up his job as chief executive, as he preferred to move to a life-sciences venture-capital firm.

Mr Thian called 2005 an "annus horribilis" yesterday but said things would improve this year under the new US chief executive, Bill Emhiser, who took up his post in November. Mr Thian said: "We chose the wrong chief executive two years ago. In a company without leadership, lots of things don't happen."

Whatman also missed a big order for DNA storage technology in the fourth quarter, worth nearly £1m, which is expected to be delivered in the first half of this year. Mr Thian blamed a US sub-contractor for the delay.

That means underlying sales rose only 1 per cent last year, adjusted for the acquisition of Germany's Schleicher & Schuell. Accordingly, annual earnings before interest, tax and amortisation will miss the bottom end of analysts' forecasts of £24.3m, the company warned. Mr Thian is the preferred candidate put forward by a group of investors to replace the recently departed chairman of SkyePharma, Ian Gowrie-Smith.

The rebel investors, led by North Atlantic Value, said Whatman's profits warning did not change their view of Mr Thian. "He has an outstanding track record at Whatman. One difficult quarter doesn't undermine that," a spokesman said. SkyePharma is set to appoint a chairman at its board meeting today but has warned it would not be pressured by investors. It met Mr Thian and other candidates last week.

Mr Thian said: "If I'm appointed I'll spring into action, but I have no interest at all in getting involved in what has been a real mud-slinging match." He predicted revenues would grow between 6 and 8 per cent this year, enabling Whatman to meet analysts' profit forecasts of £32m. Despite the recent problems, Mr Thian is credited with masterminding a big turnaround in Whatman's fortunes since his arrival four years ago. The Schleicher acquisition is performing well and delivering cost savings ahead of schedule.

Mr Emhiser's appointment is seen as a boost as he spent six years with Millipore, the world's largest "separation" technology company, and worked at Gelman Sciences, now a division of Pall, the world's No 2 in the industry.

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