(Recasts first sentence with Paulson calling for CEO of Premier Foods for be replaced, adds comments by portfolio manager at Paulson, other details)
July 9 (Reuters) - Hedge fund Paulson & Co has urged Premier Foods Plc to replace its chief executive officer, adding to a chorus of calls by investors for the maker of Oxo stock cubes and Mr Kipling cakes to overhaul its management team.
“The company desperately needs new management who are willing to put stakeholders’ benefits first,” Orkun Kilic, a portfolio manager at the New York-based firm, told Reuters on Monday.
The hedge fund led by billionaire investor John Paulson said it held a stake of 6.08 percent in Premier Foods as of July 6.
A representative of Premier Foods said on Monday the company stands behind its CEO, Gavin Darby, but declined to elaborate.
Britain’s Premier Foods has been under fire by some shareholders for what they perceive as a lagging share price. Some investors have lined up against Darby, blaming him for a failed takeover bid by U.S. spice maker McCormick & Company Inc two years ago.
“Unfortunately, the board rejected an offer from McCormick at 65p more than two years ago, claiming Gavin (Darby) could create more shareholder value,” Kilic told Reuters.
“Today the stock languishes at 40p while the management and the board keep their comfortable jobs.”
Premier Foods shares gained 3.1 percent to 42 pence on Monday.
Influential shareholder advisory firms ISS, Glass Lewis and Pensions & Investment Research Consultants have backed Darby, who has been in the role since 2013.
Shareholders will decide whether to replace Darby at the company’s annual general meeting scheduled for July 18. Hedge fund Oasis Management has led the effort to remove Darby.
Premier has said that the board remained unanimous that Darby was the best person to implement its agreed strategy, which “is clearly working.”
In recent months there has been considerable movement in the food sector with a number of companies exploring possible sales and acquisitions. Hedge funds, particularly activists, have been throwing their weight behind efforts to force some companies to overhaul management and boost shareholder returns.
Last month Conagra Brands Inc bought Pinnacle Foods Inc, urged along by Jana Partners. This month Third Point called for faster changes at Nestle SA .
Japan’s Nissin Foods Holdings Co Ltd is the largest shareholder in Premier with a stake of 19.5 percent, according to Thomson Reuters data. (Reporting by Sangameswaran S in Bengaluru and Svea Herbst-Bayliss in Boston Editing by Keith Weir and Matthew Lewis)