Edinburgh based oil explorer Capricorn Energy – formerly Cairn Energy – is facing a second battle with its shareholders after Britain’s biggest asset manager has called for the directors to be ousted.

Legal & General Investment Management (LGIM), which holds a near 4% stake in the FTSE 250 company, is agitating for changes over dissatisfaction with the proposed merger with Israel-based gas group NewMed.

Already this week Palliser Capital, the activist investor and third-biggest Capricorn shareholder, has demanded an extraordinary general meeting in a bid to remove seven of the nine directors, including chief executive Simon Thomson.

It is not uncommon for directors to face active opposition to a proposed merger but to face two successive revolts is highly unusual.

Shareholders managed to halt the proposed tie-up with Irish group Tullow Oil in September but the switch of partner has proved to be an equally unpopular move.

LGIM told The Times: “We believe there has been a substantial breakdown in relations between the current Capricorn board and Capricorn shareholders.

Despite extensive engagement with the Capricorn board since the summer, we retain a number of concerns with the strategic direction and approach by the board. Therefore, we believe a change of directors is now warranted.”

Investors controlling about a third of its shares have now publicly stated their wish to oust Capricorn’s directors.

Cairn Energy was established by former Scotland international rugby player Bill Gammell.