Aryzta in advanced takeover talks with activist hedge fund

Embattled Irish-Swiss baked goods group Aryzta said on Thursday that it is in advanced talks to be taken over by a unit of US activist hedge fund group Elliott Management, led by billionaire Paul Singer.

“There is no certainty that those discussions will result in any offer being made. A further announcement will be made if and when appropriate,” the company said in a statement after European stock markets closed.

The development comes less than a week before an extraordinary general meeting (egm) is scheduled to take place next Wednesday, at which Aryzta’s choice for future chairman faces a challenge from a group of dissident shareholders, who own more than 20 per cent of the company and have been campaigning for boardroom renewal for almost four months.

Approaches

Aryzta announced on May 13th that it had hired investment bank Rothschild to carry out a “strategic review” of the business, on the same day Swiss activist investor Veraison and the bakery group’s largest shareholder, Cobas Asset Management, declared that they had joined forces to press the group to find ways to enhance value for investors.

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The baked goods group said on July 20th that it had received approaches from a number of unsolicited parties interested in taking over the business.

Aryzta has a market value of just over €570 million, with the stock having fallen more than two-thirds in value since the company raised about €800 million in an emergency share sale in late 2018.

The group, which owns the Cuisine de France and Otis Spunkmeyer labels, has been struggling to halt a decline in earnings, particularly in the US, and negative investor sentiment towards its complex capital structure.

Chief executive Kevin Toland had been making headway since taking over what was a deeply troubled business in late 2017, overseeing almost €400 million of asset sales, reducing net debt, and pursuing a cost-cutting programme designed to deliver €200 million of savings in the three years to July 2021.

The Veraison-led group of investors have called on Aryzta to sell off a further €600 million of assets to reduce debt and “return the business to profitable growth”.

The shareholder group originally asked on May 20th for the company to hold an egm, so that they could put forward candidates to contest the seats of chairman Gary McGann and four other directors.

Successor

Mr McGann said last month that he was stepping down. Aryzta’s choice of successor, Andreas Schmid, the former head of Swiss-Belgian chocolate giant Barry Callebaut, will be coming up against the rebel shareholder group’s candidate, Urs Jordi, the former head of Hiestand International, which merged with Irish group IAWS in 2008 to create Aryzta.

Elliott was first reported last month to be among parties circling Aryzta. A spokeswoman for the firm and spokesman for Aryzta declined to comment beyond brief statements on Thursday confirming the takeover talks.

The Veraison-led group last night said it expected the extraordinary general meeting planned for next Wednesday would go ahead and pointed out that the board had a duty to carefully examine concrete takeover offers.