Two major shareholders have backed a revolt against the chief executive of Premier Foods, making it increasingly likely Gavin Darby will be forced out even if he survives an investor vote next week.
Darby has come under fire from the activist group Oasis Management, the second-biggest shareholder in the company behind household brands such as Mr Kipling, Angel Delight and Bisto.
Oasis, which has a 9.3% stake, plans to vote against Darby’s re-election as CEO at Premier’s annual general meeting on 18 July and his position was further undermined by reports that he had lost the support of the US hedge fund Paulson.
Orkun Kilic, a portfolio manager at Paulson, told the Sunday Telegraph: “The company desperately needs new management who are willing to put stakeholders’ benefits first and we hope this upcoming AGM will be a reflection point.”
Another top-10 shareholder told the newspaper: “We plan to vote against Gavin Darby’s re-election. After the failed McCormick bid, we don’t think he can be trusted.”
Paulson, which has a 6.2% stake, has been disappointed by the company’s performance in the two years since it held abortive takeover talks with McCormick, the American company best known for Schwartz spices. Last year, Paulson described Premier as having been “grossly mismanaged” by Darby.
Premier’s shares are languishing at 40p, compared with the 65p-a-share offer from McCormick that was rebuffed in favour of an alliance with Nissin, a Japanese noodle-maker, which remains Premier’s largest shareholder with a 20% stake.
Since taking charge in 2013, Darby has chipped away at Premier’s debt mountain – a hangover from an ill-judged acquisition spree in the years prior to the financial crisis.
Before he joined, the company had sold off brands including Hartley’s jam, Sarson’s vinegar and Branston pickle to cut debt. In 2014, Darby led a £1.1bn refinancing that included a deeply discounted rights issue, which raised funds from shareholders.
Premier’s chairman, Keith Hamill, has defended Darby and argued tough market conditions mean it is the wrong time to sell off more brands. Oasis has suggested the Batchelors brand could fetch more than £200m. Hamill, who will hold a final round of shareholder meetings this week, has said Premier is a “well-run business”.
With the Darby camp propped up by Nissin and the support of the shareholder advisory groups Glass Lewis and ISS, the outcome of the meeting is expected to be close. However, a major shareholder vote against Darby would make it difficult for him to continue as chief executive.