Owen Killian chucked a proverbial grenade into the Aryzta trenches with the announcement that he had sold nearly two thirds of his stake in the company.
The food group has been struggling to stem investor unease about the company’s US business, which is reported to have lost some big contracts, and a potentially costly French acquisition.
News that Killian had cashed in nearly €16 million of chips sent the shares into another nosedive.
In the past year, they’ve shed more than 50 per cent of their value, dropping from a high of €72 in March 2015 to today’s low of €33.70.
Shortly after the company alerted stock exchange, Killian issued his own statement, saying he regretted the move while insisting the disposal was “triggered by the weakness in the share price impacting the collateral value of the share”.
It would appear Killian,reputedly Ireland’s highest paid executive, used his substantial holding in the group as collateral for personal borrowings.
The tone of the statement and the use of the word “triggered” suggests the sale may have been forced on him.
Often there’s a forced sale if shares are pledged as security and the value drops, sending the loan-to-value ratio above a certain threshold.
Either way, the last thing a company director wants to be doing in a falling market is selling shares .
The share price is now plummeting towards a six-year low of 34 Swiss francs (€31.50), potentially wiping off millions in value for investors, who have up until recently viewed Killian as a man with the Midas touch.
He is credited with transforming a struggling agricultural feed and fertiliser business – as it was under the former Irish Agricultural Wholesale Society (IAWS) – into a slick, fast-moving food empire.
It started way back in 1997 with the acquistion of the Cuisine de France brand for IR£51 million (€64 million). The price was viewed as astronomical at the time. However, the company's par-baked concept transformed the market and funded later acquisitions of Delice de France in 1999, La Brea Bakery in 2001, Groupe Hubert in 2005 and Otis Spunkmeyer in 2006, as well as an eventual tie-up with coffee and doughnut chain Tim Hortons.
Aryzta now has extensive operations in Europe and North America, which generate an annual turnover of €3.47 billion.
At the centre of its current woes is the performance of its US business, which lists McDonald's, Subway and Burger King among its blue chip clients.
Overcapacity compounded by the loss of some big baking contracts, however, has eroded margins.
The overcapacity problems were initially triggered by Subway’s move to shift cookie production for its 4,500 European outlets from the US to Europe because of new EU rules on GM foods. Aryzta is said to supply the US chain with around 100 million cookies a year.
The company has tried to fill the hole in its US operations by re-launching retail offerings from its La Brea Bakery and Otis Spunkmeyer brands but this expected to take time.
Another issue for investors has been the acquisition of a 49 per cent stake stake in French frozen food group Picard for €446 million.
The Picard brand, pitched as high-end convenience, is not viewed by the market as the right fit for the company, which previously signalled a move to get out of the already saturated frozen food market.