Aryzta board divided as Elliott takeover talks drag

The board of Aryzta is at odds over whether to continue to entertain a potential takeover bid from a unit of US activist hedge fund group Elliott Management, or start assessing approaches from almost 20 parties eyeing parts of the baked goods group, according to sources.

While the Swiss-Irish group's new chairman, Urs Jordi, said on his appointment in mid-September that now was "the worst time" for a sale, the board has extended an exclusivity period with Elliott Advisors twice since then to give the hedge fund time to make a formal offer.

Aryzta, owner of the Cuisine de France brand in Ireland and a supplier internationally to the likes of McDonald's, Subway and Lidl, said in early September that it was in "advanced discussions" with Elliott. The latest deadline is due to expire later this week, according to sources.

It is understood that Mr Jordi, two other European baking industry figures voted in as directors in September under boardroom coup, are keen to engage with potential bidders for parts of the business – including its troubled North American business – but cannot proceed as long as Elliot continues to enjoy exclusivity.

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Joined forces

The new directors are said to be supported by Legarda Zaragueta, the board representative of major shareholder Cobas Asset Management, which had joined forces with Swiss investment firm Veraison to orchestrate last month's boardroom overhaul. Aryzta has received approches from between 15 and 20 parties in the past month that have expressed an interest in parts of the business, sources said.

However, the four directors are outnumbered by five existing non-executive directors, who were part of a decision to enter discussions with Elliott in the first place – on foot of advice from financial advisers in Rothschild to put the entire business up for sale.

A spokesman for Aryzta declined to comment on the boardroom differences.

Veraison issued a statement on Tuesday morning calling on Aryzta and Elliott to provide clarity by the end of this week regarding a potential takeover offer, saying it was time for the hedge fund, run by US billionaire Paul Singer, to "put up or shut up".

“This is in the best interest of all stakeholders as it allows the company and the new leadership to implement any required measures without delay,” it said.

Meanwhile, Aryzta said it was postponing its annual general meeting, which was due to take place in Switzerland on November 11th, in order to give it “further time to evaluate the available range of strategic and financial options”.

Impairment charges

Aryzta posted a €1.09 billion net loss for its financial year through July, driven by €988 million of impairment charges against assets, mainly in its troubled North American operation, and losses on businesses being sold, it said earlier this month.

The result was also affected as sales, especially to catering customers, slid amid widespread Covid-19 lockdowns earlier this year, resulting in underlying earnings before interest, tax, depreciation and amortisation (Ebitda) dropping 15.4 per cent to €260 million.