Future of Premier Foods chief in the balance after ‘rejecting advice’ to sell Batchelors
PREMIER Foods boss Gavin Darby failed to act on investment bank advice to sell the company’s Batchelors 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 today at its annual general meeting.
The embattled chief executive angered an activist investor by failing to act on advice from bankers to cash in on the brand and repair the balance sheet.
It 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 knifeedge 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 Batchelors 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”. 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’s public criticism, 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 Oasis were tipped off about the meeting, however. Sources said Premier executives were left surprised at their presence at the key event.
A Premier Foods spokesman said that Oasis was “welcomed” to the capital markets day.