(Bloomberg) -- WiseTech Global Ltd. shares rebounded immediately after Chief Executive Officer Richard White shifted to a different role in a bid to defuse damaging allegations about his behavior with women.
Shares in the Australian freight-software company jumped 13% in Sydney trading Friday, recovering much of this week’s losses. The company’s market capitalization had slumped more than A$7.7 billion ($5.1 billion) in the previous four days after a series of ever-worsening media reports and claims about White.
White is taking a short break before starting a new role focused on product and business development, WiseTech said late Thursday. His new 10-year contract as a consultant comes with a two-year notice period, while his A$1 million annual salary is unchanged.
The switch allows WiseTech to hold on to White — the company’s co-founder, largest shareholder, and arguably its most important asset — while officially stripping him of the top job.
The move appears to have appeased the nation’s largest pension fund, the A$341 billion AustralianSuper, which is the fourth- largest shareholder in WiseTech. The fund said it had engaged “extensively” with WiseTech’s board and management over the past two weeks.
“The fund notes that the WiseTech board has engaged appropriate experts to review the specific issues raised and we support this approach,” an AustralianSuper spokesman said in an email. “We remain a long-term investor in WiseTech and consider its long-term value proposition as strong.” AustralianSuper owns an almost 3% stake in WiseTech, company filings show.
‘Compelling Opportunity’
With no sign that White is leaving any time soon, banks including Goldman Sachs Group Inc. and Citigroup Inc. told investors to buy the stock again.
“This announcement is a significant step towards resolving the uncertainty,” Goldman analysts led by Kane Hannan said in a note, upgrading WiseTech stock to a buy. “The significant selloff presents a compelling opportunity to buy one of Australia’s best global growth stories.”
White’s long-term contract in his new role highlights his commitment to the company, Hannan wrote.
White’s resignation as CEO followed accusations that he’d paid millions of dollars to a former partner to settle allegations of inappropriate behavior. The Australian Financial Review reported a former board member at WiseTech had accused White of intimidation and bullying. The newspaper also said White had a years-long relationship with an employee before gifting her a A$7 million waterfront house in Melbourne.
While the company hasn’t specifically addressed the multiple allegations leveled at White, law firms Herbert Smith Freehills and Seyfarth Shaw LLP have been hired to assist a board investigation into the claims.
Chief Financial Officer Andrew Cartledge becomes interim CEO immediately and the search for a permanent replacement will start soon, WiseTech said Thursday.
Morgan Stanley said in a report that “key-man risk” — an apparent nod to White’s importance to WiseTech — has always been the biggest threat to the stock.
White founded WiseTech in 1994 with Maree Isaacs, turning it into a key provider of the software that coordinates logistics and shipping across the world. Twenty-two years later the company was valued at A$1 billion when it listed on the Australian Securities Exchange.
The following year it entered the S&P/ASX 200 and today it employs 3,300 people across 37 countries. It claims the majority of the world’s biggest global logistics providers and freight forwarders among its clients, including DHL, China’s Sinotrans, Japan’s Nippon Express and APL Logistics.
The company’s solution to this week’s crisis means “the key drivers of a long path of rising intrinsic value are intact,” Morgan Stanley analysts led by Andrew McLeod said in a note, reiterating an overweight rating on WiseTech stock.
“Accumulating at this time will reward long-term investors,” McLeod said.
--With assistance from Amy Bainbridge and Jackie Edwards.
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