It comes after Hong Kong-based investor Oasis Management Company called for Premier Foods’ boss Gavin Darby to be removed.
Oasis, which has a 9.34% shareholding, then called on Nissin Foods, which has over 19% share, to join its calls.
Nissin has remained tight-lipped but Oasis has made it clear it will be voting against Darby’s re-election at the forthcoming Annual General Meeting (AGM) and urged all fellow shareholders to do the same.
“In his first full year as CEO (pro-forma year ended 5 April 2014) trading profits were approximately £140m and, four years on, they have fallen to £123m,” it said in a recent statement.
“Gavin Darby has set and missed multiple targets over the last five years. In his defence against the 65p per share £537m approach from McCormick in 2016, he targeted sales growth of between 2% and 4%, which was abandoned in 2017,” the statement further said.
“At the time of the 2014 rights issue, he targeted a net debt/EBITDA ratio of below 2.5x, which was never achieved and was reset to 3x by 2020, a target which is far away.”
Oasis said it has “no faith” in his ability to meet the target.
The firm further added, under Darby’s leadership, Premier Foods has consistently made “poor corporate governance decisions”, including denying shareholders the opportunity to evaluate the £537m 65p per share takeover approach from McCormick two years ago.
“Gavin Darby has overseen five years of failure which has led to considerable destruction of shareholder value. The equity market has long lost faith in his leadership, and in our view his self-interest and self-preservation, which we will no doubt see much of over the coming weeks, have driven a culture which does not respect the interests of shareholders,” said the company.
“Gavin Darby, who frustratingly has driven Premier Foods into its current zombie-like state, has no credible strategy to return Premier Foods to growth and, as the largest independent shareholder, we have completely lost faith in him.
“It is time for change. Long suffering shareholders need new energy, leadership and fresh ideas. The status quo is no longer tenable.”
Premier Foods’ statement
In response, the board of Premier Foods said it has been made aware that Oasis intends to vote against the re-election of Darby as CEO and “may encourage others to do the same”.
“The board strongly believes that Gavin Darby is the best person to lead the company and to execute the board's strategy,” the board said.
“Having regard to the best interests of the company's shareholders as a whole and its other stakeholders, the board unanimously recommends that shareholders vote in favour of Gavin Darby's re-election as the Chief Executive Officer at the company's AGM and will communicate further in due course.”
Oasis has proposed that Alastair Murray, chief financial officer of Premier Foods, becomes interim CEO with the support of Alex Whitehouse, managing director, UK of Premier Foods, “ensuring stability”, and that a leading search firm be appointed to find a permanent external CEO “in short-order”.
Known for Mr Kipling and Cadbury cakes and Ambrosia custard, Premier Foods will hold its AGM in London on July 18, when the votes will be cast.
In the year leading to 31 March 2018, the company’s revenue was up 3.6% to £819.2m, while pre-tax profit rose 74.2% to £20.9m — its best performance in five years.
Moreover, it said international sales increased 25%, and claims to be “clear No. 1 market leader in the group’s five main categories”.
