Premier Foods CEO to Step Down After Battle With Activists
(Bloomberg) -- Premier Foods Plc’s chief executive officer will step down, as the maker of Bisto gravy and Mr. Kipling snacks weighs asset sales following pressure from activist hedge fund Oasis Management Co.
CEO Gavin Darby will leave on Jan. 31, the company said Tuesday in a statement. Premier Foods also said it is in discussions with potential buyers of its Ambrosia brand of frozen custard. Oasis had pressured the company to sell another brand.
The shares rose as much as 3.7 percent in London.
The moves follow a drawn-out battle with Oasis, which had been urging the board to oust Darby, saying he drove the company into a “zombie-like state.” In July, shareholders voted in favor of keeping the CEO in place, even after hedge fund Paulson & Co. joined the call for new management.
“We welcome Gavin Darby’s departure, and are optimistic about the path ahead,” Oasis said in an emailed statement. “We look forward to Premier Foods accelerating and realizing its true potential.”
Darby, who has been at the helm for almost six years, was under pressure to revive profit and reduce debt. The CEO faced additional scrutiny after McCormick & Co. abandoned a takeover effort in April 2016, saying Premier’s board wanted too high a price. The decision to step down was related to a change in strategy and had nothing to do with the Oasis campaign, Darby said on a call with reporters.
“The timing is all to do with the announcement we made today,” Darby said. “This is the final step for me in terms of the transformation.”
The company chose Ambrosia for a possible sale, rather than the Batchelors soup and noodle brand, whose divestment Oasis had sought. Jefferies estimates that Ambrosia is Premier Foods’ third-biggest brand, with sales of about 90 million pounds ($116.25 million), analyst Martin Deboo wrote in a note.
The pudding label is “ultimately more valuable to somebody else than it is to us and it’s easy to extract industrially from Premier Foods,” Darby said.
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