Oasis Management Company – the largest independent investor in Mr Kipling owner Premier Foods – has accused CEO Gavin Darby of driving the business into “its current zombie-like state”.
The claim comes days after Premier said it had become aware Oasis plans to vote against the re-election of Darby as chief exec at the company’s AGM next month, and that Oasis may encourage others to do the same.
At the time, Premier said its board unanimously recommends shareholders vote in favour of re-electing Darby, adding that it “strongly believes” Darby is the best person to lead the company and to execute the board’s strategy.
In a statement issued yesterday (24 June) Oasis, which holds a 9.34% share in Premier, called for Darby to be removed with immediate effect. It is alleging “years of persistent shareholder value destruction, poor financial performance, consistent missed targets, a lack of strategy and weak corporate governance”.
Hong Kong-based Oasis criticised Premier for its handling of a rejected 65p per share takeover approach from McCormick in 2016 and an “unsatisfactory response” to a consequent strategic review designed to find ways of creating shareholder value.
Shares are currently trading around 35% down on their position at the time of the McCormick bid.
Although Premier reported an overall 3.6% increase in revenue to £819.2m in its latest full-year results, with adjusted profit before tax up 5.9% to £78.6m, the business has been under pressure for a number of years.
Branded sales through its cakes business, which includes Mr Kipling and Cadbury cakes, and accounts for around a quarter of total revenue, have fallen 3.2% year-on-year although a strong own-label performance meant the division recorded a 1.2% hike in revenue.
Oasis is proposing the appointment of a head hunter to find a replacement for Darby, suggesting Premier chief financial officer Alastair Murray becomes interim CEO, supported by current Premier UK managing director Alex Whitehouse.
“As the largest independent shareholder, we have completely lost faith in him [Darby],” stated Oasis, adding that the business had seen “considerable destruction of shareholder value”.
“It is time for change. Longsuffering shareholders need new energy, leadership and fresh ideas. The status quo is no longer tenable.”
Premier today reiterated that the board was “100% backing” Darby, who joined the company in 2013 following the departure of Michael Clarke. Darby worked for Coca-Cola for 12 years and was CEO of Cable & Wireless Worldwide, where he oversaw its sale to Vodafone.