Premier Foods boss Gavin Darby heads for exit after battle with activist

Joanna Bourke
Gavin Darby is planning to step down as chief executive of Premier Foods

Premier Foods on Tuesday bowed to investor demands for change, revealing under-fire boss Gavin Darby will leave the Mr Kipling cake maker.

Darby, who narrowly survived a shareholder rebellion to oust him earlier this year, will step down on January 31 after six years at the helm.

The 62-year old, whose annual salary is £700,000, has been under pressure to boost returns since 2016, when the Schwartz spices owner McCormick abandoned its 65p-a-share proposal offer, valuing the business at £537 million. Today the shares edged up 0.76p, to 38.86p.

Hong Kong-based Oasis Management, which owns a 17.3% stake, said ahead of the annual meeting that Premier Foods was “zombie-like” under Darby.

An Oasis spokesman today welcomed the departure, and added that the firm is “optimistic” about the path ahead.

Darby insisted the fiery meeting in July had not influenced his decision to leave.

Asked if Oasis’s pressure had had any influence on the move, he said “absolutely none”, but the firm has not yet lined up a successor. Details of a potential pay-off were not disclosed today.

Darby — whose major achievement was a restructuring of Premier’s huge debt pile in 2014 — plans to stay within the industry and back businesses in the sector.

His departure came alongside a shake-up for the manufacturer behind Batchelors noodles and Bisto gravy.

This includes a potential sale of the Ambrosia custard business, which the company said it is in discussions with would-be suitors to sell.

Investec analyst Nicola Mallard thinks that could net Premier Foods over £100 million which could be used by the firm to pay down some of its £500 million-plus debt.

Premier Foods saw sales rise 1.3% to £358 million in results for the 26 weeks to September 29. It made a statutory pre-tax loss of £2.2 million, widening from a £1.2 million loss a year earlier.

Darby said: “We have a strong innovation plan in place for the second half of the year, and profit expectations for the full year remain unchanged.”

He said the business is in good shape and it felt like the “perfect time” to step down.

On Brexit, the firm said it is stockpiling some ingredients to prepare for March 2019.

If it gets to January and a no-deal looks likely, the company intends to start upping production.