Leading Aryzta shareholder slashes stake post-profit warning

Aryzta, the Swiss-Irish food company behind Cuisine de France breads and pastries, has seen its second largest shareholder cut its stake by more than half following a profit warning from the group last week.

Massachusetts Mutual, mainly through its OppenheimerFunds unit, has sold 3.03 million shares in Aryzta, cutting its stake from 6.1 per cent to below 2.9 per cent, according to two regulatory filings issued to the stock exchange in Zurich in recent days. It has now fallen to number five on the main shareholders’ list.

The Boston-based group would have made about €78 million from the sale, compared to the €126 million the shares were worth immediately before Aryzta surprised the market on June 24th by warning that its underlying earnings per share for the five months to the end of December was tracking about 20 per cent behind that posted for the year-earlier period.

This mainly reflected the group failing to anticipate the impact of its cookies and muffins unit Otis Spunkmeyer pushing its brands directly onto retailers' shelves. This has put it in direct competition with food companies who had outsourced baking to the company and reacted by pulling those contracts.

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A spokesman for Aryzta declined to comment on the share sale, while George Evans, chief investment officer for equities at OppenheimerFunds, did not respond to a request for comment.

UBS, the company's seventh biggest investor, has also cut its stake marginally to 2.3 per cent.

Negative updates

The profit warning was the latest in a series of negative updates from the company over the past two years. The company’s woes can be traced back to March 2015, when the stock was sold off after Aryzta posted weaker-than-expected results and followed, two weeks later, by the acquisitive company’s worst-received deal: the purchase of a 49 per cent stake in French frozen foods firm Picard.

Aryzta’s 39.4 per cent drop during January made it the worst-performing stock globally in the packaged foods industry, compared to a median gain of 1.7 per cent.

The company's warning has heaped pressure on chief executive of almost 15 years Owen Killian, and chief financial officer Patrick McEniff, according to market sources.

It has also prompted the group’s new chairman, Gary McGann, to commit to canvassing shareholders on what to do with its joint venture investments, which may result in the sale of its Picard stake.

Aryzta shares rallied as much as 7.9 per cent on Friday, the most since September, to claw back some of the ground lost over the past week and a half. However, they remain down by more than a third from where they were trading before the profit warning.