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Zero-waste recycling group Close the Loop (ASX: CLG) has announced an exit of senior leaders from the board in the wake of a $143.6 million takeover bid from Adamantem Capital.
CEO Joe Foster and chairman Greg Toll are stepping down from the group with the search for a new CEO likely to target a US-based appointee as Close the Loop increasingly focuses on expanding its global operations. Chief financial officer Marc Lichtenstein is also stepping down as an executive director.
“The transformational acquisition of ISP Tek Services in April 2023 has contributed greatly towards our growth and not only shifted the company’s operational focus towards IT refurbishment, but also geographically towards North America,” says Toll in his address to shareholders at the AGM this morning.
“IT refurbishment is today our core focus and represents our largest and most immediate growth opportunity.”
Close the Loop acquired Texas-based refurbished electronics business ISP Tek Services for $100 million last year in a transformational deal for the group which has operations in the US and Europe.
The departure of Foster and Toll announced today also affirms the likely success of the takeover by Adamantem Capital, which has extensive investments in the sustainability sector.
The Sydney-based private equity group earlier this week announced a non-binding indicative offer of 27c per share for Close the Loop which has been unanimously recommended by the board in the absence of a better offer.
Toll says the buyout bid reflects Adamantem Capital’s recognition of the “upside potential for the business”.
Close the Loop was founded as the world's largest take-back provider of ink and toner cartridges and merged with fellow Victorian business O F Packaging as part of an ASX listing in 2021, establishing an end-to-end powerhouse for hard-to-recycle materials that combines with product design and manufacturing.
The company has focused on expanding its IT refurbishment business, including a geographic expansion into Europe and the Middle East as well as extending its services “deeper into the product lifecycle, with a particular focus on IT equipment coming off lease”.
“As a result of this expansion the company expects to diversify its product mix across several global original equipment manufacturers in the coming years,” says Toll.
“The board believes that along with our flexible packaging business, we have a significant global growth opportunity in IT refurbishment, and that significantly greater revenue and earnings can be captured in the coming years with appropriate investment and focus.
“Recognising the emerging opportunity in IT refurbishment and wanting to more closely align board and management experience and expertise with our future industry focus, the board is today beginning a renewal process.”
During his address to shareholders, Toll announced that he has resigned as chairman, stepping off the board from today, with non-executive director Grant Carman appointed interim chairman.
He says the company will be looking to fill the role with an “IT knowledgeable ASX chairman”.
Foster has also resigned as CEO after leading the company through a series of acquisitions, including ISP Tek Services.
“We look forward to Joe’s ongoing contributions to the leadership team,” says Toll, adding that executive director Lawrence Jaffe will step in as interim CEO.
“The search for a new group CEO with deep experience in IT refurbishment and strong OEM (original equipment manufacturing) relationships has begun,” says Toll.
“It is envisaged that the group CEO role will be based in North America and therefore expected that the new chairman will share the responsibilities of a market-facing role once appointed.”
Chief financial officer Marc Lichtenstein, an executive director, is also stepping down from the board although he will remain CFO and company secretary.
“This board and management renewal is an important part of the company’s transition and ongoing evolution as it matures and repositions itself as a global leader in IT refurbishment,” says Toll.
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