November 13, 2018 / 7:58 AM / a month ago

Premier Foods CEO Darby quits after shareholder revolt

(Reuters) - The chief executive of Oxo-cube maker Premier Foods (PFD.L) is stepping down under pressure from an activist investor after failing to halt a share price slide since a proposed takeover fell through two years ago.

The company also said on Tuesday it was in talks to sell its Ambrosia rice pudding and custards brand to cut a debt pile that exceeds 500 million pounds and laid out plans to speed up investments in marketing and high-return capital projects.

Gavin Darby has led the Mr Kipling cake company since 2013 but was wounded in July when almost 41 percent of shareholders backed an attempt to oust him led by activist hedge fund Oasis Management.

Darby had faced pressure to revive the business after Premier rebuffed a takeover approach from U.S. food maker McCormick (MKC.N) in April 2016, since when shares have lost a third of their value.

Darby said it was the right time for him to go and denied that it was connected with the shareholder revolt.

“Having today announced a new strategic initiative for the business, I have decided to step down as CEO on 31st January 2019, which will mark the sixth anniversary of my joining Premier Foods,” he said in a statement.

Oasis was pleased at the change of leadership.

“We welcome Gavin Darby’s departure, and are optimistic about the path ahead. We look forward to Premier Foods accelerating and realizing its true potential,” it said in a statement.

Premier Foods’ top shareholders found themselves on opposing sides of the battle to oust Darby with the largest investor — Japan’s Nissin Foods Holdings (2897.T) — backing him.

Shares of the company were up 2.2 percent at 38.95 pence at 1030 GMT, well below the 65p McCormick proposed.

STOCKING UP

Trading profit for the company, whose other brands include Bisto gravy, rose 6.3 percent to 51 million pounds in the 26 weeks ended Sept. 29, up from 48 million pounds a year earlier and ahead of some analyst forecasts.

It maintained its profit expectations for the full year. Analysts on average are estimating trading profit of 126 million pounds, according to company provided consensus, ahead of 123 million pounds last year.

The company has been cutting costs as part of a two-year plan launched in 2017 by laying off people and streamlining its warehousing and distribution network.

It said talks to sell Ambrosia, which accounts for under 10 percent of its total revenues, were in early stages and that it expects strong demand for the dessert brand.

The company’s plan to sell only Ambrosia is in contrast to Oasis’ demands to sell its Batchelor soup brands.

The company said it will stockpile packaging material and ingredients ahead of Brexit. It added that it would start building an inventory of finished goods in January.

(The story refiles to add full name of Chief Executive in third paragraph).

Reporting by Arathy S Nair in Bengaluru; Editing by Saumyadeb Chakrabarty/Keith Weir

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