Aryzta needs to sell €600m of assets to reset business, shareholders claim

Activist investors up the ante ahead of August showdown with Swiss-Irish food group

Shares in Aryzta are down more than 85% from when the company raised about €800m in an emergency share sale in late 2018. Photograph: Reuters

Troubled Swiss-Irish food group Aryzta needs to sell off a further €600 million of assets to reduce debt and "return the business to profitable growth", a group of activist shareholders have claimed.

The investors, led by Swiss group Veraison, declined to say whether this might involve the sale of its US business, but they voiced concern that previous offers for Aryzta's North American assets had not been taken seriously by its board and that investors had not been informed about the offers.

The shareholders, who include Aryzta’s largest investor Cobas, are seeking to oust Aryzta chairman Gary McGann and four other directors in a bid to reverse the decline in shareholder value.

Aryzta, a Dublin-listed company 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.


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

At a presentation on Thursday, the shareholders claimed Aryzta had failed to deliver the promised earnings growth and debt reduction, suggesting that most of the improvement in the company’s net debt position – now put at €1.5 billion – had come from shareholders via the capital raise.

As part of its turnaround programme, Aryzta sold off several non-core assets, including its stake in French frozen foods group Picard.

Too complex

The shareholders claimed, however, that the business, which supplies quick-serve chains such as McDonald’s and Subway, was still too complex – spread across multiple channels in five continents – and that it needed to return to its core competencies, namely artisan breads and pastries.

Additional asset disposals of € 600 million plus would allow it to reduce all or a large part of its bank covenant net, “getting Aryzta out of the hands of creditors”, they said.

“This will allow Aryzta to invest again in the business in order to return it to profitable growth,” they said. However, they said they were not calling for a fire sale of assets, particularly in light of the Covid-19 pandemic.

In May, Aryzta appointed investment bankers Rothschild to carry out a strategic review of the group amid speculation it could be preparing to put itself up for sale.

The shareholders are calling for an extraordinary general meeting (egm), due to take place next month, to be fast-tracked so they can push through changes at board level ahead of the strategic review, something the company is resisting.

The company has agreed to hold an egm in middle of next month, but only after the strategic review is complete.

Veraison and Cobas want to replace several members of the board with their own candidates and want chief executive Kevin Toland to step down from the board to focus solely on his chief executive role.


In a statement on Thursday morning, Veraison said it expected invitations to the egm “without further delay”.

It also noted that the group had increased its combined holding of Aryzta from 18.4 per cent to more than 20 per cent.

Veraison claimed two weeks ago that Aryzta’s decision to hold an egm on proposals for the board in the middle of August amounted to “delaying tactics” as it would be taking place after a strategic review of the business is completed.

The shareholders have, however, signalled they may be willing to drop their demand that Mr Toland step down from the board if it agrees to a wider overhaul of non-executive directors.

Eoin Burke-Kennedy

Eoin Burke-Kennedy

Eoin Burke-Kennedy is Economics Correspondent of The Irish Times

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times