Updated from 1:18 p.m. EDT
, a maker of plastics and rubber compounds, announced Wednesday that its CEO, Phillip D. Ashkettle, has resigned, but the company said his departure would not affect its proposed merger with rival
The decision paves the way for Thomas A. Waltermire, Geon's chairman and chief executive. Waltermire now is poised to become the top officer of PolyOne, the proposed company formed by Hanna and Geon, both Ohio-based plastics producers.
Under the initial merger agreement -- announced in May -- Ashkettle was slated to take the top spot at PolyOne. Waltermire, who would have been president and chief operating officer, was not expected to assume the chief executive role for another two years.
Move Could Ease Integration
Analysts said they were not shocked by the move and suggested that Waltermire's faster-than-anticipated elevation could ease the integration of the two companies, helping them achieve promised cost-savings at a faster pace.
"It's natural for the guy who is ultimately responsible for the company to have ultimate control," said Mark Gulley, whose firm,
, has not done any underwriting for the companies. "And he wants to have that control now. They're just accelerating what was going to happen anyway."
The news comes at a delicate time for the proposed PolyOne, which is expected to begin operations on Sept. 1. The deal still must gain approval from shareholders of both companies later this month.
Ashkettle's resignation will take effect immediately, the company said. "Mr. Ashkettle's departure was partly a result of the recognition by the board that we could push ahead with a single leader," said Christopher Farage, a Hanna spokesman. Only the directors on the board, he added, are privy to any other reasons for the decision.
Hanna's Troubled Stock Price
Timothy Gerdeman, who follows Hanna for
, said the move "reflects the board's frustration with the company's languishing stock price" since the merger was announced, and it should allow the deal to proceed more smoothly. Hanna's shares have dropped more than 30% since May 8, closing Tuesday regular trading at 7 13/16.
"The financial community as a whole tended to deem Geon as a better managed company than Hanna," Gerdeman noted. Hanna's shares finished up 1/8, or 2%, at 7 15/16, reacting positively to the announcement about Ashkettle.
Hanna warned investors in July that it would not meet second-quarter earnings expectations because of a few factors, including higher raw material costs and a weaker-than-expected performance of its Cadillac plastic business.
Then later last month the company delivered earnings of 19 cents a share, excluding special items, down 17% from the comparable period of 1999, when the company posted earnings of 23 cents a share. Analysts polled by
First Call/Thomson Financial
had expected earnings of 27 cents a share.
But at the time Ashkettle expressed confidence about the company's long-term prospects. "We understand what the problems were in the second quarter, and have put into place actions and processes that will address these problems," he said in a statement.
Hanna said David H. Hoag, one of its directors, will become interim chairman. "The integration process is off to a great start," Hoag said in the statement. "I have been struck by Tom
Waltermire's strong leadership skills, his energy and his enthusiasm for challenges."
Waltermire joined Geon as senior vice president and treasurer just before the company's initial public offering in March 1993, and he quickly became chief financial officer. Prior to that, he worked as an official at
Shares of Geon closed Wednesday at 16 1/8, up 5/16, or 2%.