Premier Foods CEO set to survive investor vote

LONDON (Reuters) - The embattled chief executive of Premier Foods looked set to survive a shareholder revolt to oust him on Wednesday, as the company weighs selling parts of the business to speed up a turnaround called for by activist investors. The maker of Mr Kipling cakes and Bisto gravy has been under shareholder pressure ever since U.S. food maker McCormick walked away from a takeover approach in 2016 and the shares have languished, prompting some investors to accuse the board and CEO Gavin Darby of mishandling the offer.

Premier’s second-largest shareholder, activist hedge fund Oasis Management, had called for Darby’s immediate resignation and urged shareholders to vote against his re-election on Wednesday.

Following an annual general meeting in London where Oasis representatives traded accusations with Premier’s supporters, the company said Darby had received the support of 58.92 percent of proxy votes counted ahead of the meeting, with 41.07 percent voting against his re-election.

“It’s clear we don’t have the support of some shareholders and we need to continue to discuss that with them,” said Chairman Keith Hamill after the meeting, adding that the board wanted Darby to stay. “If 40 percent of people want you to do something, and 60 percent don’t, you need to think about and talk to the 40 percent, but there’s no reason for ignoring the 60 percent.”

Premier shares were down 3.7 percent at 45.10 pence at 1309 GMT, paring losses earlier in the session. Although the stock has fallen 28.2 percent since Darby took over, it has recovered over the course of the proxy fight as investors anticipated asset sales or other strategic moves.

STRATEGIC QUESTIONS

Oasis, based in Hong Kong, has accused Darby of having no credible strategy to tackle slowing UK growth and reduce its net debt, which stands at around 495 million pounds ($645 million).

Darby, who has led the Oxo stock cube-maker for more than five years, said he was open to selling assets at the right price.

“Nothing is off the table,” Chairman Keith Hamill said on Tuesday.

Hamill said the company had held exploratory talks to sell its Batchelors soup brand to Japan’s Nissin Foods previously, although nothing materialised.

Nissin, Premier’s largest shareholder, took a stake in Premier as it was talking to McCormick and some critics argue that the ownership stake has served as a poison pill for other potential suitors. Nissin and Premier also have a commercial partnership, which Oasis has argued is a conflict of interest.

Oasis nearly doubled its stake in Premier to 17.3 percent in the week before the annual meeting, taking it close to Nissin’s 19.75 percent. Oasis said on Wednesday that about 4 percent of those shares were borrowed, as the hedge fund tried to “neutralise” Nissin.

Premier also gave a trading update on Wednesday, saying the Batchelors brand continued to “display excellent growth”, helping Premier’s quarterly sales rise 1.7 percent.

The company’s largest brand, Mr Kipling, boosted sales following a brand relaunch in March that included a TV advertising campaign, brand re-design and new packaging.

Premier has seen sales outside its home market grow, thanks to its partnerships with Nissin and candy-maker Mondelez.

Sales at its international business rose 4 percent in the quarter and nearly 20 percent over the last two quarters, the company said.

($1 = 0.7673 pounds)