(Reuters) - Activist investor Oasis Management stepped up its campaign against Premier Foods’ management on Friday, questioning the board’s culture after its own chairman Keith Hamill called some of the British firm’s brands “weak cards”.
Premier Foods has been under pressure to improve its performance since rejecting a 2016 takeover bid from U.S. food-maker McCormick and Hong Kong-based Oasis wants to remove Chief Executive Gavin Darby.
Oasis, Premier’s second-largest shareholder, has engineered a showdown at the firm’s annual general meeting next month by calling for shareholders to vote against Darby’s re-election.
However, influential shareholder advisory firm Glass Lewis backed Darby and recommended on Friday that shareholders vote for his re-election in July.
Founded in 2002 by Seth Fischer, who leads the firm as its chief investment officer, Oasis said it was “extraordinary and unprecedented” that Hamill, in comments reported this week by the Financial Times, described some of its brands, which include Mr Kipling cakes and Angel Delight, as “weak cards”.
Oasis also criticised Hamill’s defence of the board’s strategy and executive pay.
Premier Foods is one of several European companies which have been targeted by activist investors, including Akzo Nobel, Telecom Italia and Whitbread.
“Oasis considers the brands within Premier Foods to be exceedingly high quality and very valuable. Rather more ‘gems’ than ‘weak cards’, but gems that seem to be being mis-managed,” it said in a statement, adding that sales of Batchelors Soup, for example, were growing at 11 percent a year.
A Premier spokesman said that the board remained unanimous that Darby was the best person to implement its agreed strategy, which he said “is clearly working”.
The spokesman said he believed Nissin, Premier Food’s biggest shareholder, backed Darby for re-election but noted it was a question for them. The Japanese noodle maker has declined to comment in the past and was not immediately available outside of Japanese business hours.
Oasis holds a 9.3 percent stake in Premier Foods, which has been reeling under debt which it managed to cut by more than 5 percent to 496 million pounds this year.
Hamill challenged Oasis to come up with a new strategy, which Oasis said made it look like the board had “given up”.
Rejecting Hamill’s assertion that Darby had turned Premier into a well-run and efficient company, Oasis said it was rather in a “zombie-like state”, with no credible growth strategy.
Oasis also said the CEO’s 8 million pound reward over the last five years “totally unacceptable”. Under Darby’s leadership, Premier’s share price has slid by more than a third.
The Premier spokesman noted that Darby’s pay had not increased since he joined.
Premier Food’s full-year sales growth of 3.6 percent was largely fuelled by its international performance and sales of its top-performing Nissin-partnered Batchelor brand.
The company said last year it was exploring options as part of a regular review into maximizing shareholder value. Darby also played down reports that it was looking to sell its Batchelors brand to Nissin as a part of this.
Reporting by Sangameswaran S in Bengaluru and Simon Jessop in London; Editing by Alexander Smith and Elaine Hardcastle