Ex-Manpower Chief to Head Parent Firm

Mitchell Fromstein, ousted last month as head of the employment group Manpower Inc. by its British parent Blue Arrow PLC, emerged victorious in a coup Friday to become the new chief executive of the entire group.

The board of Blue Arrow announced that Fromstein would take over from Tony Berry as chief executive.

In the board room struggle, Fromstein, 62, was forced to resign last month as head of Milwaukee-based Manpower, a giant temporary recruitment agency he helped build.

But that led to a campaign by U.S. holders of Manpower agency franchises to have him reinstated. The group approved a resolution of “no confidence” in the replacement management brought in by London-based Blue Arrow.

Berry, 46, a schoolboy boxer who became one of Britain’s most dashing entrepreneurs, remains chairman of the board but is no longer chief executive.

Some financial analysts said Berry’s ouster was due partly to a poor stock-price performance after Blue Arrow’s 1987 takeover of Manpower, and to controversy over the flop of a $685-million (387-million pound) stock flotation to help finance the $1.34-billion deal.

Friday’s board statement said the decision to move Fromstein to Blue Arrow to replace Berry as chief executive resulted from differences between directors on management style.

The Manpower franchise holders said in a statement from Chicago that they were pleased with the change in management. The group said although it was never its goal to replace Berry with any specific individual, “we welcome the news that Mitchell Fromstein will assume leadership of the company.”

They said the appointment is clearly in “the best long-term interest of Manpower, its employees, customers and franchisees as well as Blue Arrow and its shareholders.”

Growth Under Berry

Financial analysts said Berry had felt that Fromstein was interfering with his plans to integrate and rationalize the group. But Fromstein had given Manpower eight years of solid profits growth and two-thirds of group profits came from operations that Fromstein controlled, analysts said.

“I think this must be seen as a great relief in that it clears the air,” said Mark Shephard of brokers Phillips & Drew. “There had been intense speculation as to what is going on, a lot of unpleasant rumors of bids, breakouts, buyouts and so on.”

Roger Hardman of brokers James Capel said: “Berry’s staying on as non-executive chairman means that everybody knows where they stand. Fromstein is certainly in the driving seat and a management buyout is no longer a possibility.”

Under Berry, Blue Arrow enjoyed spectacular growth, with profits rising from about $725,000 (410,000 pounds) in 1984 to almost $55 million (30 million pounds) in 1986.

It made a series of British takeovers, and then moved onto the global stage in 1987 to win Manpower. But the stock issue to help pay for that deal coincided with the October, 1987, stock market crash.

The Department of Trade and Industry is investigating Blue Arrow’s former investment bank adviser, County Natwest, over an alleged stock-price support operation following the failure of the stock flotation.

Berry has said he did not know of County Natwest’s actions at the time.

Berry’s share holding in Blue Arrow amounts to about 2% of the company and is worth an estimated $22.5 million (12.7 million pounds) at the current market price.

Blue Arrow is this month expected to announce its results for the year to October, 1988.