Parties interested in Aryzta may afford McGann graceful exit

Irish business grandee Gary McGann admitted in early 2019, a little year into the job as chairman of the Aryzta, that he may not have taken on the job had he known how much trouble the Swiss-Irish baked goods group was in when he was approached to take on the task.

But it's clear now that McGann, a former chief executive of Aer Lingus and Smurfit Kappa Group, is determined to exit Aryzta on his own terms.

McGann, who turns 70 next month, and Kevin Toland, the chief executive he brought in to steady Aryzta after years of roll-up dealmaking under previous management gave way to a series of profit warnings and negative earnings, were quick to roll up their sleeves.

Cost-cutting programme

They have overseen almost €400 million worth of asset sales, reduced net debt, pursued a cost-cutting programme designed to deliver €200 million of savings in the three years to July 2021, and raised €800 million in a share sale in late 2018 – albeit possibly a year too late.

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However, one of their main targets – turning around the company’s North American business – had fallen behind schedule. And the fallout from the Covid-19 pandemic threw up greater challenges.

With a group of activist shareholders, including Zurich-based Veraison Capital and Cobas Asset Management, cropping up in recent months agitating for further asset sales and manoeuvring for the ouster of McGann and some other board members, it was looking increasingly difficult for the Irish businessman to emerge unscathed from a showdown at an extraordinary general meeting on the matter.

Good grace

News on Monday that Aryzta has received approaches from a number of unsolicited parties interested in taking over the group offers McGann the chance to extract himself with good grace. He’s announced that he will step down if a deal has not been struck by the meeting, scheduled for September 16th.

Still, with the company currently trading at a little over €500 million, it’s difficult to see shareholders who backed the share sale in 2018 getting that money back – let alone what they committed before that again.