Switzerland-based bakery group Aryzta has sold its business in North America to an affiliate of US private-equity firm Lindsay Goldberg.
In the week before Christmas, Aryzta had said it was in talks to offload assets in North America and Latin America after a review of its operations. That review, which came amid investor pressure on Aryzta and takeover interest in the company, culminated in December with the company rejecting an offer for the business and deciding to quit those two markets but focus on Europe and Asia-Pacific.
Urs Jordi, Aryzta’s chairman and interim CEO, said the deal with Lindsay Goldberg “represents a significant inflection point” for his company and was “vindication of our simplification strategy to the outright sale option”.
The agreement with Lindsay Goldberg gives the assets sold an enterprise value of US$850m, Aryzta said in a statement announcing the transaction.
Jordi added: “Today’s transaction delivers significant debt reduction and balance sheet strength. It now allows us to focus on delivering further operational improvements and returning to organic growth. 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.”
Before Christmas, Aryzta, as well as announcing the planned end to its presence in North America and Latin America, rejected a takeover proposal from Elliott Advisors (UK), which is part of New York-based fund manager Elliott Management. Aryzta said at the time the decision was taken “in line with its fiduciary duties and in the interests of all stakeholders”.
The bread maker had also previously been in negotiations with the fund manager but they were called off in October without an agreement being made.
Aryzta has seen its sales and profits dwindle in the last few years and has also accumulated a substantial debt pile, with former CEO Kevin Toland, who left the company in November for no specified reason, instigating the disposal of non-core assets. In the meantime, its two largest investors – Cobas Asset Management and Veraison Capital – had been calling for more disposals, and have pressed for a simplified business model to turnaround the company.
This morning, Aryzta announced its first-half financial results. From the company's continuing operations excluding its to-be-sold business in North America, revenue fell 21% to EUR752.5m (US$897.1m) amid pressure on foodservice sales in Europe. Aryzta also reported an "underlying EBITDA" of EUR76.1m, down 36.1%.
The group booked an underlying net loss of EUR30.8m for the six months to 30 January, compared to a profit of EUR25.7m. Aryzta said it had incurred restructuring, impairment and disposal-related costs" of EUR35m, which, it added, were "mainly due to severance costs and excessive advisory fee commitments, as well as Covid-19-related costs".
Jordi said: "Today's results highlight the significant progress achieved as a result of our strategy to simplify the business and to de-risk the balance sheet with the sale of our North American business for $850m. The progress to date validates the overwhelming shareholder vote for change in September and December 2020 and the renewed board's decision to reject the proposal to sell the entire business.
"We can now focus on delivering the necessary operational improvements and returning to organic growth as we leverage the significant broad bakery experience to improve shareholder returns."