Dissident shareholders slam timing of Aryzta’s EGM

A group of dissident shareholders Aryzta has accused the baked goods group of "delaying tactics" in only agreeing to hold an extraordinary general meeting (egm) that could overhaul the board next month - after the company completes a review of its strategy.

The shareholder group, led by Swiss activist investment firm Veraison Capital, and which have a combined stake of 18.4 per cent stake in Aryzta, asked the company on May 20th to hold an egm, at which they are proposing resolutions to unseat chairman Gary McGann and four other directors from the board.

The proposed removal of chief executive Kevin Toland from the board would free him up to focus on his executive functions, they argue. Aryzta responded that it would hold an egm in the middle of August.

“The deliberate delay of the egm leads to the unacceptable situation that the strategy review announced at short notice on 13 May 2020 should be completed before the egm and thus before a comprehensive renewal of the board of directors,” Veraison said on Friday.

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“Since 2017, the existing board of directors has failed to set the right strategic course to focus and reduce the complexity of Aryzta. This has led to enormous value destruction for shareholders. It is unacceptable that before a renewal of the board and without taking all stakeholders into account, the strategy review, neglected for a long time, is now to be concluded on short notice with an investment bank.”

Future company direction

Shares in Aryzta are down more than 85 per cent from when the company raised about €800 million in an emergency share sale in late 2018.

Mr Toland said on May 28th, as the company reported that its revenue fell 24 per cent in the three months to the end of April as the pandemic hit business, that he was keeping an "open mind2 on options for the company, having hired Rothschild & Co in April to carry out a strategic review by the end of July.

Veraison said the future direction of the company should be determined by directors responsible for the company over a longer term, adding that it is "convinced that the proven industry expertise" of its board replacement candidates "would bring valuable expertise to the ongoing strategy process". The group dissident shareholders, also including Cobas Asset Management, are proposing Swiss food industry veteran Urs Jordi be installed as chairman.

Since taking over a deeply troubled business in late 2017, Mr Toland has overseen almost €400 million of asset sales, reduced net debt, and been pursuing a cost-cutting programme designed to deliver €200 million of savings in the three years to July 2021.

However, one of his targets - turning around the company’s North American business - has fallen behind schedule. The Covid-19 pandemic has thrown up greater challenges.

It is understood the Veraison-led group is keen for Aryzta to further cut debt through asset sales. Swiss business publication Handelszeitung reported this week that an approach had been made by an unnamed party in 2018 to buy the US business for between $1.2 billion and $1.8 billion. A spokesman for the company declined to comment.