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September 11, 2020

Aryzta in advanced takeover talks with activist hedge fund ahead of EGM

Struggling Swiss-Irish bakery group Aryzta has had another offer put on the table ahead of next week's extraordinary general meeting.

By Dean Best

Aryzta has said it is in “advanced discussions” with Elliott Management for the New York-based investment firm to acquire the Swiss-Irish bakery group, which is under pressure from major shareholders to revamp the board and simplify its business model.

The announcement last night (10 September) comes just days before next Wednesday’s extraordinary general meeting (EGM), when Aryzta investors, including the two largest – Cobas Asset Management and Veraison Capital, with a combined 20% holding – will vote on the composition of the board.

Zurich-listed Aryzta said in a statement it has “entered into advanced discussions with Elliott about a potential public tender offer for all the outstanding shares of Aryzta. There is no certainty that those discussions will result in any offer being made. A further announcement will be made if and when appropriate.”

Aryzta’s shares on the Swiss exchange were up around 16% this morning at 72 Swiss francs, but are still down 33% from 108 francs at the start of the year.

Meanwhile, Veraison issued a statement yesterday saying it hopes the EGM will “be held as planned to finally allow shareholders to exercise their voting rights”.

It continued: “The shareholder group points out that the newly composed board of directors will also have the fiduciary duty to carefully examine concrete takeover offers and to evaluate the best alternatives for the company and all its shareholders.” 

Hedge fund manager Elliott is led by billionaire investor Paul Singer, who is the founder of the business. The potential takeover announcement came from the UK unit, Elliott Advisors.

Other potential offers for Aryzta have also reportedly been put forward over the past few months, including from US-based bakery firms Flowers Foods and Hostess Brands, along with Japan’s Yamazaki Baking and Mexican bakery business Grupo Bimbo.

Back in July, Aryzta acknowledged it had received “unsolicited interest” from third parties.

And also over the summer, media reports have suggested Canada-based manufacturer and retailer George Weston was considering whether to put in a bid for Aryzta, while private-equity firms Apollo Global Management and Cerberus Capital Management were also said to be eyeing the business. 

Aryzta hired French investment bank Rothschild & Co. in April to review strategic options for the retail and foodservice company, including a possible wholesale disposal of the business, although media reports have previously suggested a piecemeal sell-off of assets is not an option, which had been touted in the investment community. 

Under chief executive Kevin Toland, Aryzta has taken a number of initiatives to try and turn the struggling business around, but the measures have so far failed to deliver concrete results, to the chagrin of Veraison and Cobas, which have been in a battle with management for months over the composition of the board.

Toland has divested around EUR380m (US$450.1m) in non-core assets and raised EUR800m from the equity market in 2018 but the two largest shareholders have pressed for another EUR600m of disposals to reduce its huge debt pile.  

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