The behind the scenes tussle over Stock Spirits broke out into open war on April 5, as the largest shareholder in the Central European distiller - who is reportedly planning a coup - blasted the struggling company’s strategy and called for board changes.

Speculation that Portuguese businessman Luis Amaral is preparing a bid to take control of Stock Spirits – listed in London and Prague and a major producer and retailer across Central and Eastern Europe – has been building since he became the largest shareholder late last year with a 9.7% stake.

With poor results in Poland caused by a price war, which pushed group profits down sharply in 2015, Stock is a clear target. However, CEO Chris Heath insisted to bne IntelliNews last month that there was nothing in the reports. He also denied that a sharp rise in the dividend was a defensive move.

Amaral now appears to be making his move. Western Gate Private Investments, the vehicle via which the Portuguese holds his stake in Stock Spirits, has called for Heath to be replaced and said it will seek the appointment of two non-executive directors at an annual general meeting on May 17.

Western Gate – which is also the largest shareholder in major Polish wholesaler Eurocash – blasted the strategy to halt the plummet in market share in Poland over the past two years, which was announced by Stock Spirits in March. It also complained about the "underperforming share price," which has more than halved from a peak of £3.15 and sat 37% below the listing price of £2.35 on April 1.

Stock Spirits has failed to address the local market dynamics in Poland, despite "mounting evidence" of a changing competitive landscape, Western Gate complained. The company is also a major producer and supplier of vodka and other alcoholic drinks in the Czech Republic and Slovakia amongst other Central and Eastern European markets.

"Financial performance has been poor, market share has been lost in its core Polish market, salaries and costs are too high and remote control management of the business from the UK, where the company has no major revenue generating operations, is clearly not working,” Amaral said in a statement.

“The executive team consistently blames others instead of being on the ground in Poland addressing the local market dynamics and managing the business. A fresh perspective on the board will benefit all stakeholders,” he added.

"Conflict of interest"

Stock Spirits launched its own broadside later in the day, insisting that Amaral’s “conflict of interest” via his control of Eurocash, which is a major buyer from the distiller and distributor, makes his proposals a risk for other shareholders. The company added that it is reviewing Western Gate's notice and will respond.

"Given this conflict of interest, the company does not believe that Mr Amaral's and Western Gate's interests on the management and strategy of the company are necessarily aligned with the long-term interests of all minority shareholders as a whole," the statement read.

That's a stark contrast to the approach offered by Heath last month. He claimed at the time to be amazed by the speculation that the Portugese was looking to raise his stake to a majority. He was keen to point out that Amaral’s purchases to date had been in a personal capacity and not linked to Eurocash. Stock Spirits has “seen no change” in its relationship with the wholesaler and retailer, he insisted. “We treat him the same as any other important investor.”

Amaral began buying Stock Spirits shares in November, when the company lowered its guidance for 2015 results, producing a sharp slide in its stock price. The ownership structure of the company is fragmented, with several investment funds holding below 8%.

Heath also claimed to have never heard of Pavel Krupa, the Slovak billionaire who said earlier this year that he wants to secure 5% of Stock Spirits in order to have a voice amongst shareholders. Called variously an 'activist shareholder' and a 'raider,' Krupa has suggested the company’s struggles must be either the result of incompetence or corruption amongst management.

The move by Amaral may have been sparked by Stock Spirits' strategy to press forward with acquisitions in order to lower its dependence on the Polish market, which currently accounts for 52% of revenue, suggests Petr Bartek at Erste Bank. "Amaral may be ... interested in a takeover of SSG and any larger M&A would make it difficult for him," the analyst writes.

The speculation on a potential takeover effort saw Stock Spirits' share price recover somewhat through the day, after the initial blast from Western Gate knocked it from GBP1.50 to a low of GBP1.45 in morning trade. The stock rose back to GBP1.48 before closing at GBP1.46 on the London Stock Exchange.