Pressure builds on CEO of Mr Kipling cake-maker Premier

July 10, 2018

Gavin Darby, chief executive of the UK’s Premier Foods, has come under renewed pressure after Oasis Management, the activist investor lobbying for his removal, revealed on Tuesday that it had doubled its stake in the Mr Kipling cake-maker.

The Hong Kong-based hedge fund now holds 17.3 per cent of the voting shares, up from 8.8 per cent previously. It said that by the end of next week’s annual meeting, it believed Mr Darby would no longer be heading the company.

“Our increased stake demonstrates our deep commitment and belief in the potential of Premier Foods, as well as our belief that, under a different CEO, the company will be in a better position finally to capitalise on its many options for long term shareholder value creation,” it said in a statement.

The announcement comes a day after US hedge fund Paulson & Co, disclosed that it had increased its voting shares to 6.1 per cent from 2 per cent previously.

Paulson called Premier “grossly mismanaged” last year when it blamed the heavily-indebted food group for failing to secure a sale of the company to McCormick, the US spice maker, in 2016 and promised higher returns which have failed to materialise.

If both Oasis and Paulson vote against Mr Darby’s re-election, their combined 23 per cent voting shares will be greater than the 20 per cent stake held by Nissin, the Japanese noodle-maker that is Premier’s biggest shareholder and that backs Mr Darby.

Three large proxy advisory firms — ISS, Glass Lewis and Pirc — have recommended voting in favour of Mr Darby.

Oasis has accused Mr Darby of missing targets, poor financial performance and reducing the company to a “zombie-like state”. It has called for Premier to sell some of its brands, such as Batchelors soups and dried foods, arguing this would reduce debt and financial risk.

Keith Hamill, Premier Foods’ chairman, has said that the brands would not fetch a good price in today’s “challenged” climate and backed Mr Darby, saying that since he took the helm five years ago the rate of new products had tripled and international revenues had doubled.

Arthur Reeves, analyst at Société Générale, said: “The activists are increasing the pressure. They have asked Nissin, Premier’s largest shareholder, to abstain because it has a commercial relationship with Premier, including manufacturing some Batchelor [products] on behalf of Premier.”

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