Dessert Storm II
Fresh bust-up as Mr Kipling owner is told to get rid of Batchelors soup
THE owner of Mr Kipling, Premier Foods, is under pressure to sell its lucrative Batchelors soup brand amid a spat between the group’s chief executive and its second-largest shareholder.
Hong Kong activist investor Oasis Management is calling for Premier to offload the 123-year-old division so it can free-up cash for reinvestment.
Batchelors, which makes Super Noodles and Cup A Soup, was founded in 1895 and makes around £85m worth of sales a year.
Premier also owns the rights to Bisto, Ambrosia custard, Angel Delight and the Homepride and Sharwood’s cooking sauces.
The latest call from Oasis, which has a 9.3pc stake in Premier, comes ahead of the food manufacturer’s AGM later this month.
Oasis recently demanded that chief executive Gavin Darby’s ‘shocking reign’ be brought to an end, accusing him of leaving the group in ‘a zombie-like state’.
The firm has been under pressure to improve its performance since rejecting a 2016 takeover bid from US food maker McCormick. Shares have plunged 36pc since the deal fell through.
Oasis said selling Batchelors would put the firm on ‘a solid footing’ and benefit staff, pension scheme members and shareholders in ‘one single swoop’.
One of Premier Foods pension schemes is currently carrying a £437m deficit.
‘Oasis does not seek for any of the proceeds to be directly returned to shareholders but instead be used to de-risk the company and improve its business and long-term prospects,’ a spokesman said. ‘We fail to understand why the current chief executive does not understand this.’
Oasis believes a sale of Batchelors could fetch more than £200m, helping to strengthen Premier’s pension scheme and boost its share price by as much as 125pc. But Premier rejected the proposal last night, calling it ‘ a short-term solution, but not practical’. A spokesman for the firm said: ‘We are not going to sell one of the jewels in the crown of the company.’
It is not the first time Premier has been under pressure to sell Batchelors. Earlier this year the group confirmed it was in talks with its largest shareholder, Japanese noodle maker Nissin Foods, to sell the brand in a bid to reduce its growing debt pile.
Premier partnered with Nissin to produce Super Noodle Pots last year, which the group said was ‘a perfect illustration of how Gavin’s strategy is working’.
Sales of Batchelors products increased 11pc last year compared to declining revenues three years ago.
A spokesman said: ‘ This is substantially due to the strategic partnership with Nissin and new product development – Super Noodle Pots – developed with them.’
Advisory firm Institutional Shareholder Services came out in favour of Darby yesterday.
Its support for the chief executive comes after Glass Lewis and Pensions & Investment Research Consultants recommended that shareholders reappoint him at this month’s AGM.
Premier foods chairman Keith Hamill said: ‘The board has made a unanimous recommendation to shareholders to vote in favour of the re-election of Gavin Darby.
‘The board has confidence in him and firmly believes that he and the management team are best placed to run the business and execute the company’s strategy.’