Oasis Management, the activist investor which is trying to unseat Premier Foods plc CEO Gavin Darby, has opened a new front in its battle with the UK food company.
The Hong Kong-based investor – Premier’s second-largest shareholder with a 9.3% stake – has today (5 July) released an analysis of the benefits of the manufacturer selling its Batchelors packaged food brand.
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Oasis suggests a sale of Batcherlors – under which products such as Cup-a-Soup and Super Noodles are sold – would result in a material share price increase of up to 125%.
“As a result, Oasis urges the board of Premier Foods to place Batchelors in an open auction run by an independent investment bank,” it said.
Oasis believes that the sale of Batchelors, a brand with a turnover of around GBP85m (US$112.4m), would generate more than GBP200m of proceeds.
“A sale would reduce interest costs at Premier Foods by more than 65%, increase the company’s annualised profit before tax and allow the company to strengthen its three pension schemes and invest in its on-going business,” it said.
Yesterday (5 July), Oasis asked Premier’s largest shareholder, Nissin Foods Holdings, to abstain in Darby’s re-election vote at its annual general meeting on 18 July due to “substantial conflicts of interest”.
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By GlobalDataOasis is calling for Darby to be replaced as CEO – a position he has held since 2013 -, claiming he and his management team had “failed miserably,” with its approach to running the business, a claim refuted by Premier and the trustees of its three largest pension funds.
Today, independent voting advisory service Institutional Shareholder Services (ISS) also recommended shareholders of Premier reappoint Darby.
The organisation joins fellow advisory services Glass Lewis and Pensions & Investments Research Consultants (PIRC) in supporting the current management.
Noting ISS’s backing, Premier Foods chairman Keith Hamill said: “The board has made a unanimous recommendation to shareholders to vote in favour of the re-election of Gavin Darby. The board has confidence in him and firmly believes that he and the management team are best placed to run the business and execute the company’s strategy.”
However, on Twitter, Oasis replied: “Let’s be clear about ISS’s ‘backing.’ ISS says its support is ‘qualified’ and ‘not without concerns for shareholders’, {and that} Premier’s ‘minimally acceptable operating performance’ under Darby is ‘not particularly compelling.'”
