The boss of Mr Kipling cakes has narrowly survived an attempted coup by ruthless hedge funds.
Gavin Darby, chief executive of Premier Foods, scraped through a crucial vote despite a shareholder rebellion led by Oasis Management and Paulson & Co.
Together the funds mustered a combined 23per cent stake in the company and had urged other investors to help them oust Darby for presiding over ‘zombie-like’ performance.
The boss of Mr Kipling cakes has narrowly survived an attempted coup by ruthless hedge funds. Gavin Darby, chief executive of Premier Foods, scraped through a crucial vote
But they failed despite a tense showdown, with support from Premier’s biggest shareholder, advisory services and others helping the 62-year-old to fight another day.
Darby and other directors were still left weakened. His re-election was opposed by 41per cent of investors – a sizeable revolt – with 25per cent also rejecting his £1.2million pay. Keith Hamill, the chairman, saw his re-election opposed by nearly 26per cent.
A spokesman for Hong Kong-based Oasis, which is run by corporate raider Seth Fischer, claimed Darby had only survived thanks to the support of Japan’s Nissin Foods, which backed Darby with its 19.6per cent stake.
He added: ‘The message from today’s huge negative vote could not be clearer – Gavin Darby has no credibility and he should step down immediately.
Shares in Premier, which owns Mr Kipling, closed down 4.3per cent, or 2p, at 44.85p last night
‘If he is unwilling to resign, we urge the other directors to discharge their duties and act in the best interests of the shareholders as a whole to remove him.’
Paulson & Co, which is run by Wall Street billionaire John Paulson, did not comment afterwards.
Darby’s allies, including chairman Keith Hamill, claimed he had begun reining in Premier’s debts and had brought the company back from the brink.
Five years of turmoil
Gavin Darby takes over at Premier Foods
Premier rejects takeover from US spice maker McCormick
McCormick walks away from takeover talks
Premier strikes partnership with Japan’s Nissin Foods
Premier issues a profit warning
Activist investor Oasis Management builds stake
Oasis and American hedge fund Paulson launch campaign to oust Darby
Darby narrowly survives
They also praised his introduction of lucrative money-spinners, such as noodles the firm sells with Nissin, which could help it get back on its feet.
But in a last-minute concession to angry investors, Darby and Hamill also said they were open to selling parts of the company.
It came after reports that Premier had been in talks about selling Batchelors, which makes Cup A Soup and Super Noodles, to Nissin. Darby said: ‘If the price is right, Premier would look at assets.’
The row over the chief executive sprang from a failed takeover of Premier by US spice maker McCormick two years ago.
Premier rejected three offers, saying they all undervalued it, in a move that enraged some investors. Its share price had spiked during the talks but plummeted when McCormick walked away.
In an intervention at the meeting, former Premier chairman David Beever insisted Darby’s critics were wrong to blame him for the failure to reach a deal. Beever, chairman at the time, claimed McCormick ditched the talks due to concerns about pensions that emerged in due diligence.
He told shareholders: ‘The criticism of Gavin for walking away is completely and utterly wrong. He is probably the best chief executive I have ever worked with.’
But Charles Miller Smith, a former non-executive director who also served at the time, said it was the right moment for a change.
After the vote, Darby told the Mail the result was a ‘comprehensive outcome’. When asked if he felt he commanded enough confidence to continue, he replied: ‘Of course. I received a huge expression of support from the chairman and others.’
Hamill said the board would continue to listen to concerns. Shares in Premier closed down 4.3per cent, or 2p, at 44.85p last night.