When Premier Foods (PFD) rebuffed a 65p per share approach from McCormick in April last year, its board sought to win over disgruntled investors by promising its innovation and partnership with Japan’s Nissin would supercharge its growth.

Less than a year later, and after two profits warnings, the knives are back out. After its shares slid by more than 10% following another worrying third-quarter performance, investor Paulson & Co called on the board to sell up. Claiming the company was “grossly mismanaged”, Paulson said: “Management’s failure to achieve the revenue growth commitments made only two months ago is evidence of their inability to operate the company. The board should act upon their fiduciary duty and put the company up for sale.”

The roots of Paulson’s anger are clear. Premier’s shares dropped below 40p this week, having fallen by more than 25% since its first profits warning in October. After it announced profits would be 10% below expectations and a 1% fall in third-quarter sales on Wednesday morning, shares fell 12.8% by Thursday lunchtime to 41.6p. The shares briefly peaked at 62p during the McCormick bid talks, but haven’t otherwise threatened that level since early 2014 as the supplier suffered through the supermarket price wars. 

Shore Capital argued the performance represented an improvement on its “disastrous” second-quarter figures - but expressed concerns. “Today’s update represents a material increase in our concerns surrounding Premier Foods’ ability to recover from its long-standing ‘zombie’ status,” it said. “A range of NPD and innovation has failed to gain traction with consumers.”

Credit Suisse said: “£10m cost savings in each of the next two years may help protect profits to some degree, but is set against the oncoming input cost inflation. The investment case needs sales growth and that continues to prove elusive.” Jefferies downgraded its price target from 50p to 43p, and worried: “Organic value creation options would appear to be limited to i) growing out of trouble, ii) shifting to an aggressive, cash-generative, milking strategy, iii) persuading the pension schemes to stretch or defer payments, iv) selling assets and/or v) raising fresh equity. None are straightforward.”

Acquiescing to Paulson’s demands to sell-up also comes with complexities, given the 20% stake bought up by Japan’s Nissan since McCormick’s interest surfaced. “Whilst possibly viewed as a potential suitor, Nissin also acts as a poison pill for other potential suitors, so we see little scope for an attractive premium bid,” added Shore Capital.