Hedge fund raid on Mr Kipling
American millionaires take giant slice to demand sacking of Premier Foods boss
THE company behind Mr Kipling cakes has been plunged into crisis after two hedge fund tycoons stepped up a campaign to oust its chief executive.
Premier Foods boss Gavin Darby looks increasingly vulnerable after an activist fund run by Wall Street billionaire John Paulson was confirmed to have more than tripled its stake in the group to 6.1pc.
Alongside Hong Kong-based Oasis Management Company – which is run by corporate raider Seth Fischer – which holds 9.3pc of shares, Paulson & Co is calling for Darby to be sacked and has accused him of ‘gross mismanagement’.
The manoeuvres come before a showdown at Premier’s annual general meeting next Wednesday.
Paulson’s fund yesterday confirmed it had a 6.1pc stake in a regulatory filing, up from 2pc previously and making it the third-biggest shareholder. The 62-year-old raked in £11bn – the largest one-year payout ever in financial markets – after he bet against risky subprime mortgages before the market collapsed in 2007.
The father- of- two is worth about £4.7bn and owns luxury properties in New York, including a 28,500 sq ft Manhattan townhouse and a three-acre beachside retreat in the Hamptons area of Long Island.
Paulson & Co’s portfolio manager Orkun Kilic said Premier Foods urgently needed new management.
The fund and other Darby critics say he is overpaid and has presided over a ‘ zombie- like’ company for the past five years.
They are also particularly critical of a decision to rebuff takeover approaches from US spice maker McCormick in 2016, with Premier’s share price tumbling by more than 30pc since.
Oasis has also been campaigning against Darby for years. It is run by Seth Fischer, an Israeli Defence Force veteran who founded the firm in 2002. He made tens of millions of pounds from his investment in Nintendo thanks to the runaway success of the mobile game Pokemon Go. An Oasis spokesman said: ‘ Gavin Darby has overseen five years of failure. We have completely lost faith in him. It is time for change. The status quo is no longer tenable.’
But Premier’s board has urged shareholders to rally behind Darby. The embattled chief executive has also been supported by top shareholder Nissin Foods, influential advisory groups Glass Lewis and Institutional Shareholder Services, and Lord MacLaurin and Lord Price, former bosses at Tesco and Waitrose respectively.
Price has claimed Premier Foods’ troubles are down to structural problems in the market and backed Darby. He said: ‘If these activist investors succeed in removing him they risk destroying significant value, rather than creating it.’