Bloomberg News

D.E Master Blenders CEO Leaving After 1 Year Over Difference

December 10, 2012

D.E Master Blenders 1753 NV, (DE) the coffee and tea company spun off by Sara Lee Corp., said Chief Executive Officer Michiel Herkemij will leave after only 12 months in charge because of a difference of opinion.

Herkemij, a former Heineken NV executive who was hired by chairman and fellow Dutchman Jan Bennink last year, will depart at the end of 2012 “by mutual consent,” the Amsterdam-based maker of Douwe Egberts coffee said today in a statement.

Bennink will take over the 48-year-old’s responsibilities until a new CEO is appointed, Master Blenders said.

Herkemij and the board “are aligned on strategy, but there is a difference of opinion regarding the speed of implementation,” Michiel Quarles van Ufford, a spokesman, said by phone. The search for a new CEO has yet to begin, he said.

“Losing a CEO, particularly one that hasn’t been there all that long, is clearly negative,” said Jon Cox, an analyst at Kepler Capital Markets in Zurich. “But Jan Bennink is a very well-respected guy and investors will be reassured.”

Neither Herkemij nor Bennink were available for comment.

Master Blenders has had a difficult time since it was spun off from Sara Lee in June. In August, its shares plummeted after the coffee maker said it would restate earnings because of accounting irregularities in Brazil. After fourth-quarter results that analysts at Deutsche Bank AG and Nomura described as “disappointing,” the company in October reported first- quarter revenue that trailed analyst estimates.

Shares Drop

Speaking in September, Herkemij said product innovation, missing under Sara Lee’s stewardship, would help the company close the gap on competitors such as Kraft Foods Inc. and Nestle SA (NESN), whose Nespresso is the biggest single-serve brand in the $45 billion global coffee business. The CEO said at the time that he aimed to overtake Kraft as the world’s No.2 coffee maker.

Master Blenders has revamped its Senseo system with new packaging and flavors and has said it plans to expand into new regions. The company has introduced a new machine called Sarista that uses whole beans and is aimed at coffee aficionados.

“2012 was a transitional year for DEMB, as we began to implement our strategy of innovation and premiumization,” Bennink said in today’s statement. “The fundamentals we have in place today remain solid and we continue on track to deliver our objectives” for sales and earnings.

Master Blenders shares fell 0.9 percent to 8.74 euros in Amsterdam today. The announcement was made after markets closed.

Joh. A. Benckiser, the investment firm run by Bart Becht, raised its stake in Master Blenders to 15.05 percent in October. Kepler’s Cox said it can’t be excluded that Herkemij’s departure may be linked to JAB “which does have influence on the board.”

To contact the reporters on this story: Dermot Doherty in Geneva at ddoherty9@bloomberg.net; Paul Jarvis at pjarvis@bloomberg.net

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net


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