Aryzta – best known for its Cuisine de France and Otis Spunkmeyer brands – has been struggling to halt the decline in earnings, particularly hard hit by coronavirus lockdowns in the US.
It has struggled to halt a decline in earnings, despite putting in place a €200m cost-cutting programme and a major reduction in net debt.
The company has also been battling efforts by dissident shareholders – led by Veraison and Cobas, which hold around 20% of the shares – to oust the current Board in a bid to reverse the decline in shareholder value, down more than 80% since late 2018.
Both sides are set for a showdown at the Extraordinary General Meeting (EGM) scheduled on September 16, 2020.
‘A new chapter in the company’s history’
Last month, Aryzta confirmed it had received approaches from several unsolicited parties interested in taking over the group. At the time, Gary McGann said he would step down as chairman if a deal had not been secured before the EGM, spurring speculation that Aryzta had failed to secure a deal when he announced his resignation earlier this month. This led to a drop in Aryzta’s share price.
Sources close to the matter, though, insist a transaction remains on the cards.
Aryzta’s Board has recommended that Andreas G. Schmid – former head of chocolate giant Barry Callebaut – take over from McGann.
The shareholder group has proposed Urs Jordi – former head of Aryzta Europe – for the position, along with the nomination of Heiner Kamps (German food entrepreneur who founded bakery chain Kamps) and Armin Bieri (formerly CEO Hiestand/Aryzta Switzerland and CEO Aryzta Food Solutions Asia Pacific) as independent candidates to represent ‘a new chapter in the company’s history’. It has also called for the removal of CEO Kevin Toland from his role on the board.
Under Toland’s leadership, the Zurich-based baking manufacturer has failed to improve its fortunes – particularly in its key North America market – despite divesting €380m in non-core assets such as Delice de France and La Rousse Foods, raising €800m from investors in 2018 and a recent €446.6m stake in high-end French frozen food retailer Picard, which is still awaiting regulatory approval.
At last count, the embattled company’s net debt stood at €1.7bn.
According to Jordi, the journey to health is going to take Aryzta five years.
He told Swiss newspaper Finanz und Wirtschft that now was not the time to consider selling the group, but rather “Our scenario envisages the sale of non-core businesses to generate €600m. This would reduce debt to a reasonable level.”