Why Premier Foods boss backs the sale of assets
Premier Foods said it was open to selling parts of the business and acknowledged it had to speed up its turnaround plans ahead of a showdown with investors who want to replace its CEO, Gavin Darby.
The maker of Bisto gravy has been under shareholder pressure ever since US food maker McCormick walked away from a takeover bid in 2016, pushing one of its largest shareholders, Paulson & Co, to criticise the board for rejecting the offer.
Premier’s second-largest shareholder, Oasis Management, has called for shareholders to vote against Darby’s re-election on Wednesday. He survived the vote.
The Hong Kong-based investor has accused Darby of having no credible strategy to tackle slowing UK growth and reduce its net debt of around £495m.
Darby, who has been in charge for more than five years, said he was open to selling assets at the right price.
"Nothing is off the table," chairman Keith Hamill said.
Hamill said it had held exploratory talks to sell its Batchelors soup brand to Japan’s Nissin Foods, although nothing materialised. The company has a partnership with Nissin — its largest shareholder — to sell Batchelors products.
Shares of Premier had fallen 9% to 42.6p by mid-morning on Wednesday and are down 28.2% since Darby took over.
Oasis nearly doubled its stake in Premier to 17.3% in the week before the annual general meeting, taking it close to Nissin’s 19.75%. Nissin is expected to vote in favour of Darby at the meeting.
The company said in its trading update that the Batchelors brand continued to "display excellent growth", helping Premier’s quarterly sales rise 1.7%. The company’s largest brand, Mr Kipling cakes, boosted sales following a brand relaunch in March 2018 that included a television advertising campaign, brand redesign and new packaging.
Premier has experienced sales growth outside its home market, thanks to its partnerships with noodle maker Nissin and sweet maker Mondelez.
Sales at its international business rose 4% in the quarter and nearly 20% over the last two quarters, the company said.
Premier stuck to its full-year expectations and said it expects to make progress in the second half of the year.
The company said it would look to reduce debt by £25m each year.