Pressure mounts on struggling Photo-Me

Activist investors are heaping pressure on the photo-booth maker Photo-Me to oust its chief executive and chairman.

Hedge fund investor Brian Myerson's fund Principle Capital, which owns 7.2 per cent of shares, and Cycladic Capital, which owns 11 per cent, have called for an extraordinary general meeting to vote on the issue and say they already have 49 per cent of shareholders on board. They are calling for the removal of chairman Vernon Sankey and chief executive Serge Crasnianski and only need 50 per cent of the vote.

Principle's senior analyst Chris Vincent said shareholders were concerned that the company's photo-booth division - the most profitable part of the business with 22,000 instant booths - would be sold off to private equity at a price that significantly undervalues the business. Photo-Me began a strategic review of the business more than a year ago.

Mr Vincent added that investors would be happy for the strategic review to continue under new management. Photo-Me "currently gives the impression of being a private company that is run for the benefit of the chief executive and not for its shareholders", he added.

Principle has also been unhappy about the clear lack of successor to Mr Crasnianski.

The board were locked in talks yesterday over the latest demands. The company's shares have under-performed the FTSE All-Share index by around 40 per cent over the past year.