A frustrated investor has piled pressure on Premier Foods plc with a letter to its chairman bemoaning the way the UK group is run.
London-based Cape Wrath Capital said Premier‘s management and board had a poor regard for shareholder value.
Whilst Cape Wrath only has a small stake in Premier, the criticism follows negative comments about the company by US hedge fund Paulson & Co and another activist investor.
The Cape Wrath letter, sent by its investment director Adam Rackley to Premier chairman David Beever, said a “key issue is management credibility”.
Much of Cape Wrath’s criticism is linked to Premier Foods’ rejection of a GBP537m (US$689.7m) proposed takeover bid last year by US firm McCormick & Co. Premier said the offer, of 65p a share, was inadequate. The company’s shares closed today (11 July) at 39.75p.
In May, Premier – which makes products such as Mr Kipling cakes and Oxo gravy – reported a fall in underlying annual revenue and profits.
The Cape Wrath letter said Premier had shown a “disregard for long-term value creation” and accused it of a failure “to act in the best interests of shareholders during the McCormick approach”.
It also accused Premier, once the UK’s largest food business, of a failure to deliver on the strategy proposed in defence of the rejection of McCormick’s interest.
“Our overall impression is of a management and board with poor regard for shareholder value and without the skill set to deliver it,” the letter said.
In a statement responding to the criticism, Premier said: “We are aware of the recent letter sent by Cape Wrath Capital to our chairman. We value the active and constructive dialogue we have with our shareholders.”
Premier Foods cools strategic review talks
