Premier Food’s chairman David Kappler steps down

by Jenny Davey - 31/01/2010

"The former HMV chairman has run the company's board since the Hovis owner floated on the stock market in 2004."

David Kappler, the former HMV chairman, who has run the Premier board since the Hovis owner floated on the stock market in 2004, is expected to stand down at the group’s annual meeting this year.

An announcement confirming Kappler’s planned departure could come as early as this week. Premier is expected to appoint headhunters soon to search for his replacement.

The news comes amid testing times for Premier. The company, which also owns Mr Kipling cakes and Bisto gravy, has seen 14% wiped off its market value in the past two weeks after a disappointing trading update, which warned that profits would be at the bottom end of City forecasts.

Investor confidence in the company remains brittle since Premier was forced to carry out a dramatic capital restructuring and £400m rescue rights issue last year to slash its huge debt pile.

The City had thought the company was back on track after a series of product launches from some of its biggest brands. But the news that profits would be worse than many analysts had hoped for has dented sentiment again.

City sources familiar with Premier Foods said that Kappler’s departure was entirely voluntary and did not follow pressure from shareholders. He still sits on the board of Shire, the pharmaceuticals group, where he is the senior independent director, and Intercontinental Hotels.

There had been suggestions that Kappler’s relationship with Robert Schofield, Premier’s chief executive, had deteriorated after a very difficult spell for the business but insiders have dismissed the claims.

Speculation has also resurfaced that Schofield will come under pressure to leave unless the performance of the business improves.

For now, though, it is thought Schofield retains the backing of the biggest shareholders, which include Warburg Pincus, the private-equity house. Analysts at Investec believe that despite the latest stumble, there is plenty of upside in Premier’s share price. Martin Deboo, its food analyst, has set a 12-month target price of 45p. The shares closed at 32.24p on Friday, valuing the group at £780m.

Premier was spawned after a buyout of Hillsdown Holdings, a canned foods business, by Hicks, Muse, Tate & Furst, an American private-equity company, in 1999. It was renamed Premier Foods and set about building a portfolio of British brands.

In 2002 it bought a division of Nestlé, which brought household names like Branston Pickle, Sarsons vinegar and Sun-Pat peanut butter into the fold.

The business was listed in July 2004, with an initial market value of £526m. The following year it bought Bird’s custard and Angel Delight.

In 2006 Premier agreed a £460m deal to buy Campbell’s UK and Irish business, adding Oxo, Batchelors and Homepride. It was the acquisition of RHM in March 2007 that transformed the business but also saddled it with huge debts.

RHM — which owned Hovis, Sharwoods, Cadbury’s cakes, Bisto and Mr Kipling — was bought for £1.2 billion.

More Details: http://business.timesonline.co.uk/tol/business/industry_sectors/consumer_goods/article7009668.ece