Shares of Arrow Electronics (NYSE:ARW) fell over 6% Wednesday following the surprise departure of President & CEO Sean Kerins. The company said Kerins was “separated” from his role, suggesting he was terminated by the board. Company director Bill Austen has been named Interim President and CEO, and the company is launching a search for a permanent President and CEO.
In a press release after the close on Tuesday announcing the change, Arrow said the Kerins separation “is unrelated to Arrow’s financial statements”, although notably the company didn’t reiterate its financial guidance.
The CEO change is not tied to a strategic shift at the company, a company spokesperson told Investing.com. Arrow remains committed to its corporate strategy and key business priorities, and the board continues to have full confidence in current leadership. Aside from Austen being appointed interim CEO, no other leadership or staffing changes have been made at the company, the company added. Outgoing CEO Kerins will remain available in a consulting role for six months to support a smooth transition and avoid any disruption for customers and suppliers.
Commenting on the news, BofA Securities analyst Ruplu Bhattacharya said, “[t]his is a sudden and unexpected change of management, and introduces some uncertainty.” That said, the analyst highlighted that Austen has been with Arrow’s Board since 2020, and previously served as President and CEO of Bemis Company.
The news did not change Bhattacharya’s cautious view on the stock, which is unrelated to the CEO change. His bearish stance centers around “potential impact of tariffs on end demand, possible pockets of excess inventory remaining in the channel and margin pressure from unfavorable mix.” The firm rates the stock Underperform with a $110 price target.
Some Wall Street watchers have speculated that the CEO change could potentially put the company “in play” as a takeover target, given the permanent leadership void, the fact that Austen sold Bemis to Amcor before joining the Arrow board, and the weak stock performance versus peers. Others have speculated that an activist investor could be lurking in the background.
Source :
https://www.investing.com/news/stock-market-news/arrow-electronics-ceo-seperation-not-related-to-strategic-shift--sources-4243202
