After more than a year running Orange-based Bergen Brunswig Corp., longtime Chairman and interim Chief Executive Robert Martini said he’s actively seeking someone to replace him as CEO and has interviewed at least 18 candidates, with son Brent Martini among the internal contenders. “As one who didn’t plan on coming back out of retirement for any extended period of time, I’m awful anxious,” Martini said. In an interview last week, Martini said he is looking for a successor who combines leadership qualities with “a heart and desire to want to run this business, to grow the business and build upon the franchise that’s been created at this company over the years.”
Martini, 68, came out of semi-retirement to become interim chief executive of Bergen last November, after its board abruptly dismissed then-CEO Donald Roden. Roden was pink-slipped amid a falling stock price and difficulties in assimilating two large acquisitions. Since then, Bergen has worked to get its business units back on steady footing, and analysts and investors have indicated they see better things ahead for the company. Martini said the changes the company has been through in the past year have helped identify the traits he’s seeking in a new chief executive. “The profile of the individual that we’re seeking is different today than it was nine months ago,” Martini said. At that time, he said, the right candidate would have been one with experience fixing companies. Today, he said, Bergen needs an executive capable of building a company and raising visibility in the financial community.
Earlier this month, Bergen said it had retained Chicago-based search firm Heidrick & Struggles International Inc. to help find a CEO. The company also appointed outside director James Mellor, a former General Dynamics Corp. chief executive, as chairman of an executive committee that will assist in the search. Martini didn’t give a specific time frame for finding a new chief executive. But he did say that one of Mellor’s responsibilities was “to bring closure as soon as possible” and find the best possible candidate for Bergen. After a year, some observers have wondered whether Bergen, which is closely tied to the Martini family, has been serious about bringing in an outside executive to run the company, which for the year ended Sept. 30 had sales of $23 billion. At least one industry analyst believes that Bergen may have waited too long to step up the hunt. “It’s been disappointing to investors, the length of time,” said John Ransom III, who follows Bergen for Raymond James Financial in St. Petersburg, Fla. “They should have hired a search firm a year ago.” Ransom said he believes it will take Bergen at least six more months to find a permanent chief executive. But Martini said that finding a permanent chief executive wasn’t the highest priority during the period of time when Bergen was “clearing the decks” and getting its business shored up. Seth Teich, a healthcare analyst for First Union Securities in San Francisco, agrees. “I think they wanted to get their arms around the business better before (launching) a full-scale search,” Teich said. “I just think at this point, they’re more ready to attract a CEO than six months ago.” The drawn-out search has prompted talk that Brent Martini, president of subsidiary Bergen Brunswig Drug Co., could be in line to become Bergen’s permanent chief executive. Brent Martini’s elevation to Bergen’s board a year ago and his active role in the company’s shareholders meeting earlier this year fueled the speculation. But analyst Ransom said he’d be surprised if Bergen tapped Brent Martini. “The company needs to distance itself from its recent past,” he said. Teich also said he would prefer to see Bergen go outside for its next chief executive.
Robert Martini said Bergen is looking both inside and outside for its next CEO. As for his son, the elder Martini said: “Brent clearly has been one of those internal candidates that we have focused on.” Martini said the company hasn’t ruled out any internal candidates, but added, “I believe that we now are anxious to find out the best external candidate that we can find.” The senior Martini also said the new leader might not necessarily have a healthcare background. If the new executive comes from outside healthcare, he said that person could tap into Bergen’s “very strong management team” to help come up to speed on the sector. Besides the Martinis, top Bergen corporate managers include Chief Financial Officer Neil Dimick, Chief Information Officer Linda Burkett, PharMerica unit President Charles Carpenter and Steve Collis, president of ASD Specialty Healthcare, another division. Bergen’s streamlining has been going on for the better part of the past year. In July, it agreed to sell Stadtlander Drug Co. to CVS Corp. for $120 million. That was far below the $400 million it originally paid Counsel Corp. to purchase Stadtlander, which makes medications for people with the HIV virus. Bergen also agreed to sell its Bergen Brunswig Medical Corp. to Cardinal Health Inc.’s Allegiance Corp. subsidiary for $181 million. Additionally, Bergen took one-time special charges totaling $598 million in its fiscal fourth quarter ended Sept. 30, including a $505 million writedown of goodwill from its PharMerica Inc. institutional pharmacy subsidiary. “A year ago, our particular segment in the healthcare industry was not in particular favor,” Martini said. “Today, it is in favor, relatively speaking.” Bergen shares have been trending upward since the start of November and last week were at about 13, their high for the year. The company counted a market capitalization of nearly $2 billion as of late last week. Martini has said that he believes recent changes have positioned Bergen to capitalize on the underlying strength of its business. n
