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August 24, 2020

Aryzta shareholder’s pick for chairman says ‘would take five years to turn around business’

The man put forward by Aryzta's two largest shareholders for chairman of the bakery company's board has said it would take five years to turnaround the business.

By Dean Best

The man put forward by Aryzta’s two largest shareholders for chairman of the Swiss-Irish bakery company’s board has said it would take five years to turn around the struggling business.

Urs Jordi, the former head of Aryzta’s European division, has told the Swiss newspaper Finanz und Wirtschaft if he secures the chairmanship role he would sell EUR600m (US$710.2m) of non-core assets, reiterating previous comments made by the two agitating investors Cobas Asset Management and Veraison Capital.

Under the leadership of chief executive Kevin Toland, Zurich-based Aryzta has already sold off around EUR380m of such assets in an effort to reduce a huge debt pile and, despite raising EUR800m from the equity market in 2018, he has still failed to improve the fortunes of the business, particularly in its key North American market where it has struggled for some time. 

Disposing of more assets would reduce debt to a “more reasonable level”, Jordi told the publication, as he emphasised the investor’s calls for a simplified business model.

“There is a lack of industrial competence, there is a lack of growth, there is a lack of profit,” he said. “This in turn leaves its mark on the capital market. In the case of Aryzta, this means a weaker valuation and a strained balance sheet. In order to put this in order, today’s business performance is not enough. The sale of assets – not fire sales, of course – is necessary to reduce debt.” 

Back in July, Veraison and Cobas, which together hold around 20% of Aryzta, said the company would need to sell an additional EUR600m of assets to reduce its “unsustainable financial structure”.

Despite Toland getting rid of non-core assets such as foodservice businesses Delice de France and La Rousse Foods, as well as Aryzta’s stake in French frozen food retailer Picard, net debt stood at EUR1.7bn at last count, including hybrid instruments. 

In April, Aryzta hired French investment bank Rothschild & Co. to explore strategic options for the company, including a possible full scale disposal. Last week, it emerged that US-based peers Flowers Foods and Hostess Brands, along with Japan’s Yamazaki Baking and Mexican bakery firm Grupo Bimbo, may be interested in acquiring Aryzta, joining private-equity funds that have reportedly expressed an interest.  

But Jordi, the ex-CEO of Hiestand Holding, the business that merged with IAWS Group plc in 2008 to form Aryzta, told the Swiss paper now is not the right time to sell.

“I see a journey of up to five years until Aryzta looks really healthy,” Jordi was quoted as saying. 

However, Jordi has so far not been accepted as a potential candidate for chairman by Aryzta, which seems fixed on its own nominee, former Barry Callebaut man Andreas Schmid, who has been rejected by Cobas and Veraison in a long-running dispute over the future make-up of the board.  

The representative for the two shareholders confirmed Jordi’s comments to just-food. 

“Aryzta has lost market proximity. Moreover, the organisation is far too complex. The Group needs controlled simplification, geographically, structurally and in its business model,” Jordi said.

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