Business

Premier Foods activist shareholder Oasis looks to sell stake after Covid sparks sales boom at Mr Kipling giant

Activist investor which successfully fought for management and strategy shakeup has seen shares quadruple in pandemic crisis
Chief executive Gavin Darby left soon after Oasis attack
Jim Armitage @ArmitageJim
1 September 2020

Activist investor Oasis is set to sell its major stake in Mr Kipling’s cakes giant Premier Foods having successfully pushed for a shake-up of strategy and management and seen the share price rocket fourfold since March.

Premier, which just admitted to a Covid-19 outbreak at its Mr Kipling pie and cake plant in Stoke-on-Trent, has seen sales surge through the pandemic as people bought Oxo, Sharwood’s and Nissin ingredients to cook with at home.

Now, Oasis wants to benefit by selling its 10% stake, with fellow activist Paulson likely to follow suit.

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The two quietly sold 15 million and 10 million shares respectively last month, leaving them with stakes of 10% and 6%. Oasis’s 85 million shares are today worth £72 million.

More sales are expected in the coming months with one broker expecting the pair to be out entirely by the end of the year. Sources at Oasis cautioned that such a rapid exit was unlikely.

Oasis pushed for the ousting of chief executive Gavin Darby after his 2016 rejection of a £1.5 billion takeover bid from food giant McCormick valuing the shares at 65p. The shares plummeted after McCormick walked away and Darby later quit.

After an initial Covid fall to below 20p in March, Premier’s shares have soared to 86.5p today as the group proved one of the UK’s biggest beneficiaries of the stay-at-home world.

Oasis bought its stake in stages but according to Bloomberg data appears to have invested at an average of around 40p a share, meaning it will have doubled its money if it sells at current prices.

Oasis successfully pushed for a board overhaul and strategic review which led to a recent agreement to improve its pension situation and cut debts.

Premier now has a completely new management team led by chairman Colin Day, chief executive Alex Whitehouse and chief financial officer Duncan Leggett.

Oasis and Paulson’s partial sale in August went off without a big fall in the share price, but brokers want to make sure there is strong enough demand in the market to allow them to sell without hitting the shares.

Also on the board is Shinji Honda of Nissin Foods, the company’s biggest shareholder at 19%. Sources said that stake was likely to remain as the two companies are strategic partners, with Premier selling Nissin’s noodles.

This afternoon, Oasis founder and chief investment officer Seth Fischer, Founder & Chief Investment Officer of Oasis Management, issued a statement saying Oasis was a "committed, long term" investor in the business.

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