Yahoo Finance Premier Foods 'rejected sale advice' in move which sparked investor activism
Premier Foods boss Gavin Darby failed to act on investment bank advice to sell the company’s Bachelors brand, it has emerged.
The chief executive rejected the recommendation from the soup maker’s long-standing broker Credit Suisse, sparking a dispute with shareholders that has led to a bid to oust him tomorrow at its annual general meeting.
The embattled chief executive of Premier Foods angered an activist investor by failing to act on advice from bankers to cash in on the company’s Batchelors brand and repair the company’s balance sheet.
Gavin Darby, who tomorrow faces a concerted attempt by shareholders to oust him at Premier’s annual general meeting, was advised to offload the soup brand to a third party by the company’s long-standing broker Credit Suisse.
The failure to act substantively on Credit Suisse’s advice was the final straw for Premier’s second-largest shareholder Oasis Management, whose board representative resigned in protest.
Subsequently Oasis launched a stinging attack on Mr Darby, urging investors to vote against his re-election.
Mr Darby’s re-election is on a knife-edge with Nissin Foods, which owns 20pc of Premier, likely to swing the vote. While Oasis has urged Nissin to abstain, the company claims to have the support of the Japanese noodle maker.
The Mr Kipling and Bisto owner has been hamstrung in recent years by a mammoth debt pile and an unwieldy pension scheme. Its weak capital structure has been blamed for a lack of investment in some of the country’s best-loved cooking and baking brands. Batchelors, however, has emerged as Premier’s “jewel” brand, growing sales by more than 10pc per annum.
In January, Premier entered into discussions to sell Batchelor’s to Nissin in a deal worth a reported £200m. However, recommendations by bankers to look beyond related parties were not heeded, angering Oasis, sources said.
The deal with Nissin fell apart in the weeks that followed after Premier failed “to get a price worth taking”.
Oasis has previously claimed “Nissin’s primary objective is to develop the Batchelors brand” and a sale to a third party “would likely conflict with Nissin’s interests”.
A spokesman for Premier Foods said: “There was never a recommendation from Credit Suisse to the board to hold an auction.”
Meanwhile, in the wake of Oasis’ public criticism and despite its substantial shareholding in the company, Premier did not hand the fund manager a formal invite to its capital markets day on July 5. Those sent a “save the date” invitation in advance of the meeting included other institutional shareholders and leading City analysts.
Representatives from Hong Kong-based Oasis were tipped off about the meeting, however. Sources said Premier executives were left surprised at their presence at the key meeting.
A spokesman for Premier Foods said Oasis was “welcomed” to the capital markets day.
