Stock Spirits gets investor support in tussle with Western Gate

By Esha Vaish

(Reuters) - Vodka maker Stock Spirits Group Plc (STCK.L) won the backing of one of its top shareholders in its tussle with the company's biggest investor over expanding the board.

Columbia Threadneedle Investments, which owns a 4.87 percent stake in Stock Spirits, said top investor Western Gate Private Investments' proposal to add two of its nominees as non-executive directors to the board was no longer warranted.

Western Gate nominated two European drinks industry veterans to stand as independent directors at the company's annual meeting on May 23 to lend "fresh perspectives" to tackle weakness in the firm's key Polish market.

Stock Spirits offered earlier on Tuesday to find two independent directors, instead of those proposed by Western Gate, after some investors indicated support for a search.

But the company said its offer had met with resistance from Western Gate, which owns a 9.7 percent stake in Stock Spirits.

The move is seen as a partial victory for Western Gate, as Stock Spirits earlier maintained that its five-member board was sufficient.

Stock Spirits has been locked in a battle with Western Gate since April 5, when the investor expressed concerns about Stock Spirits' performance and called for the removal of the beverage company's chief executive.

Stock Spirits, which operates mostly in Poland, the Czech Republic and Italy, said last month it returned to profit in the first quarter in Poland.

In November, the company cut its full-year profit forecast as demand for its flavoured vodka fell and the Polish zloty weakened.

Western Gate said on Tuesday it would stick with its proposals, and added it had the backing of a "significant proportion" of Stock Spirits' shareholders.

In recent days, three influential investor bodies including Institutional Shareholder Services (ISS) endorsed the board changes sought by Western Gate.

Stock Spirits recommended voting against Western Gate's resolutions, saying that shareholders' interests were best served by an independent board.

Western Gate is the private family office of Portuguese businessman Luis Amaral, who is also CEO of Eurocash (EUR.WA), Stock Spirits' biggest customer in Poland.

Western Gate is also asking for a vote to back a board-level review of Stock Spirits' M&A strategy, although Western Gate's resolution to remove Stock Spirits CEO Chris Heath has been pulled after the company announced his early retirement.

(Additional reporting by Rahul B in Bengaluru; Editing by Sriraj Kalluvila and Maju Samuel)