Premier Foods chief to quit as group looks at sale of Ambrosia
MR KIPLING cake firm Premier Foods has said under-fire boss Gavin Darby will leave in January and revealed plans to sell off its Ambrosia brand as it looks to appease disgruntled shareholders.
Mr Darby will step down on January 31 after six years in the role, which follows a public row with activist investor Oasis Management and comes just months after he narrowly survived a shareholder rebellion against his re-election.
Premier said it was in talks with third parties over the possible sale of Ambrosia and its factory in Lifton, Devon, as it looks to boost its performance and slash its £500m debt pile.
Mr Darby said: “The board has determined that it should focus resources on areas of the business which have the best potential for growth through accelerated investment in consumer marketing and high return capital projects.
“Accordingly, we are pursuing options to fund these plans as well as delivering a meaningful reduction in net debt, through discussions with third parties regarding the potential disposal of our Ambrosia brand.”
He added: “Having today announced a new strategic initiative for the business, I have decided to step down as chief executive on January 31, 2019, which will mark the sixth anniversary of my joining Premier Foods.”
Premier is now starting the hunt for his successor.
At Premier’s annual general meeting in July, 41 per cent of investors voted against Mr Darby’s re-election.
Oasis had called for his departure, claiming he had presided over value destruction and having been critical of his strategy in the past when he oversaw the successful defence of a takeover tilt from US firm McCormick in 2016.
There was also investor discontent over Premier’s recent decision not to sell its fast-growing Batchelors brand.
In its half-year results released alongside details of the planned changes, Premier said it had “reflected upon the expressed views of some shareholders at the AGM”.
The potential sale of Ambrosia is seen as an olive branch, with the division the group’s third biggest brand.
Ambrosia, which is famous for its Devon Custard and Rice Pudding, was 100 years old last year and has been produced in Devon since the factory opened in 1958.
Martin Deboo, an analyst at Jefferies, said: “We get the logic, as Ambrosia is highly separable (a single factory in Devon) with associated minimal stranded cost.”
He said the success of this disposal would depend on the price achieved and was “one to watch”.
The company, which traces its history back to the early 19th century, has been looking to cut costs as part of a two-year plan launched in 2017 by laying off people and streamlining its warehousing and distribution network.
The company said it would step up investments in marketing and high-return capital projects, adding that it was pursuing options to fund these plans while also delivering “a meaningful reduction” in net debt.
The company maintained its profit expectations for the full year. Premier’s half-year results, also announced on Tuesday, showed pre-tax losses widened to £2.2m in the six months to September 29. On an underlying basis, pre-tax profits rose 14.3 per cent to £30.2m.