Linde to ring changes?

Kruger’s de­par­ture could point to dra­matic changes

Finweek English Edition - - COMPANIES & MARKETS - MARC HASENFUSS marc.hasenfuss@finweek.co.za

IS THERE MORE to the res­ig­na­tion of Afrox MD Tjaart Kruger than meets the eye? Kruger’s res­ig­na­tion an­nounce­ment – which ap­pears rather sud­den, con­sid­er­ing the lack of de­tail about suc­ces­sion plan­ning – was swiftly fol­lowed by a cau­tion­ary an­nounce­ment. It seems un­likely Afrox is mak­ing an ac­qui­si­tion, so Kruger’s step­ping down might pre­cede changes to its iconic gas busi­ness – prob­a­bly at the be­hest of con­trol­ling share­holder, Ger­man multi­na­tional Linde.

Afrox cor­po­rate com­mu­ni­ca­tions of­fi­cer Si­mon Miller told Finweek no com­ment could be added to ei­ther an­nounce­ment, as the com­pany was in a closed pe­riod.

Kruger had only been with Afrox since 2007 and – in re­al­ity – had only just in­sti­tuted cor­po­rate changes an Afrox press re­lease re­ferred to as re­or­gan­is­ing and modernising the com­pany “to re­flect the re­al­i­ties of do­ing busi­ness in to­day’s chal­leng­ing eco­nomic en­vi­ron­ment”.

Afrox, un­der Kruger, has also con­tin­ued in­vest­ing in plant ex­pan­sion and mod­erni­sa­tion, which for­mer chair­man Ken Mas­ters – writ­ing in its year to end-De­cem­ber re­sults – be­lieved the ben­e­fits of which were likely to start com­ing through from 2011 on­wards.

Of course, cyn­ics would point out Kruger’s ef­forts had also seen the usu­ally re­li­able Afrox’s prof­its crunched (down 24% to R606m in the year to end-De­cem­ber) – which might raise ques­tions about whether Linde may have shown Kruger the door.

If Kruger’s de­par­ture and the sub­se­quent cau­tion­ary do point to a dra­matic re­or­gan­i­sa­tion of its South African op­er­a­tions by Linde, then two op­tions come to mind: a buy­out of mi­nor­ity share­hold­ers or an out­right sale of Afrox. The ap­point­ment of a new MD will no doubt be telling in that re­gard.

Pre­sum­ably the op­er­a­tional lead­er­ship – in the in­terim – might fall to chair­man Michael Hug­gon, who has ex­ten­sive ex­pe­ri­ence in the gases busi­ness.

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