Aryzta to sell troubled North American business for $850m

Deal with US firm validates its decision to ‘remain independent’, bakery group says

In a statement, Aryzta said more details of the sale would be provided on Monday with the company’s half-year results. File photograph:  Nick Bradshaw

In a statement, Aryzta said more details of the sale would be provided on Monday with the company’s half-year results. File photograph: Nick Bradshaw

 

Swiss-Irish food group Aryzta is to sell its troubled North American business to US private equity firm Lindsay Goldberg for $850 million (€711 million).

The cash sale, which involves 15 facilities and 4,000 employees, is expected to be completed by the end of July, subject to regulatory approval.

The bakery group, which owns the Cuisine de France label here and is a supplier to the likes of Subway and McDonald’s, said the deal validated “the board’s strategy to remain independent”.

Last year it resisted an attempted takeover by US hedge fund Elliott, which had valued the group at €734 million.

At the time, chairman and interim chief executive Urs Jordi said the company was better off staying independent and following a strategy of simplifying the business and selling off non-core assets to reduce its debt.

In a statement, Aryzta said more details of the sale would be provided on Monday with the company’s half-year results.

The group’s North American business includes artisan bread brand La Brea, cookie and muffin brand Otis Spunkmeyer and Fresh Start bakeries, which was previously owned by Lindsay Goldberg.

Aryzta shares rose 2.7 per cent to 0.96 Swiss francs in Zurich – it has scrapped its Irish listing – but trading had finished before the deal was announced.

The company has been battling a collapse in investor confidence linked to its ailing US business, its €1 billion net debt and complex capital structure.

Mr Jordi described the deal as a “significant inflection point” for the group and a vindication of its “simplification strategy to the outright sale option”.

“Today’s transaction delivers significant debt reduction and balance sheet strength,” he said.

“It now allows us to focus on delivering further operational improvements and returning to organic growth.”

‘Underlying quality’

“The agreed price reflects well on the underlying quality of the North American businesses, its assets, the significant recovery in performance achieved by the team and bodes well for its future performance prospects under its new owners,” Mr Jordi said.

The sale is the latest chapter in a tumultuous period for the group, culminating in a boardroom coup in September and the resignation of chief executive Kevin Toland in November.

In January, it announced it would scrap its Irish stock-market listing that dates back to 1988, shifting the group’s centre of gravity to Zurich.

The company, which stems from the 2008 merger between IAWS plc and Switzerland’s Hiestand, said the decision reflected the relatively low level of trading in Aryzta shares on Euronext Dublin compared with the SIX Swiss exchange.

Prior to his exit, Mr Toland has presided over an extensive restructuring programme, overseeing almost €400 million of asset sales, reducing net debt, and pursuing a cost-cutting programme designed to deliver €200 million of savings.

However, shares in Aryzta remained in the doldrums – down more than 80 per cent since an emergency €800 million capital raise in late 2018. A boardroom coup last September saw most of the board ousted in favour of candidates put forward by the company’s largest shareholders Cobas and Veraison.