Dignity to fight to the death in boardroom battle with biggest investor

Funeral firm Dignity has accused its largest shareholder of seeking to take control of the firm without paying a bid premium as the group heads for an investor showdown over a move to oust its executive chairman.

The company will hold a meeting on April 22 for investors to vote on the proposal by Phoenix Asset Management Partners to replace Dignity boss Clive Whiley with its own founder and chief investment officer, Gary Channon.

Dignity, the UK’s only listed funeral provider, blasted the move as “wholly unnecessary” and said its three independent board directors would resign if Phoenix succeeds.

Dignity accused Phoenix, which has a stake of around 29.9% in the firm, of acting in its “own self-interest” and of attempting to “exert executive control over the board (and thereby control of the company) without paying any bid premium”.

Shares in Dignity fell as much as 6% on Tuesday.

Dignity said: “This wholly unnecessary act came at a time when the board had been making considerable progress towards the completion of the previously announced root-and-branch review.”

It added that Mr Channon lacks the “skills and judgment” to run the firm at an executive level.

Dignity revealed that Phoenix was preparing a formal takeover bid for the firm in the second quarter of last year when shares were low and the group was on the “back foot”, only for the approach to have been shelved as the stock recovered.

Speaking to the PA news agency, Dignity independent non-executive director Gillian Kent said the latest move by Phoenix was a “step too far”.

“It’s wrong for other shareholders, wrong for the company and certainty wrong for employees”, she said.

Ms Kent urged shareholders to vote on the resolutions and back Mr Whiley, who she insisted has had a “galvanising effect on the business” and needs time to complete his strategic review and turnaround plan.

“The last thing we want is for shareholders to sleepwalk into this change of control,” she added.

“It’s important that shareholders sit up and make sure their voices are heard.”

Phoenix claimed, on calling for the vote to remove Mr Whiley, that it is not looking to take control of the board and pledged not to increase its stake.

The vote comes after Dignity’s annual results earlier this month showed it swung to a £19.6 million loss despite the pandemic sending Britain’s annual death toll soaring to its highest level for more than 100 years.

It said coronavirus restrictions on funerals had affected its services, while extra expenses such as PPE measures and additional temporary staff costs also put pressure on its earnings.

The group also had to contend with a Competition and Markets Authority (CMA) investigation into the funeral sector, which started in 2018.

Last December, the CMA concluded that funerals were costing consumers too much, and made a series of recommendations.

Dignity has been undertaking a widespread review as part of a turnaround, which is set to conclude in the second quarter.

Phoenix declined to comment.