Aryzta minority shareholders back Veraison-led shareholder group’s proposals as EGM nears
13 AUG 2020
Proposals put forward by Aryzta’s [SWX:ARYN] Veraison Capital-led activist shareholding group should be approved at the Swiss bakery company’s upcoming EGM, two shareholders told this news service.
Jorge Castresana of minority shareholder Valorvento said he is “99% sure” he will back the proposals submitted by in-concert activists Veraison and Cobas Asset Management. The activist group, with a combined stake of over 20%, proposed in May a list of new board members – Urs Jordi, Heiner Kamps and Armin Bier – and asked for an EGM to vote them in.
The activist group’s proposals are logical, said Gabriel Castro of RSR Inversión & Patrimonios, an EAFI which advises banks holding 850,000 shares and EUR 2.8m worth of hybrid instruments in Aryzta. “Aryzta’s assets are great, so if you choose the right people… the business and valuation will improve very soon,” Castro said.
Aryzta, having appointed Rothschild in April to review strategic options, proposed its own list of new board members and delayed the requested EGM to 16 September. As well, last month it said it had received takeover interest, with a formal offer expected to materialise by the date of the EGM.
The activist group is determined to reject a takeover offer unless it is reviewed by its preferred new board members, as reported.
“Any takeover offer should be reviewed by an independent and qualified board,” agreed Castro. The candidates proposed by the activists seem knowledgeable, whereas the current board lacks independence and is more likely to accept a takeover offer, he said.
Castresana also agreed a new board will be better placed to judge any potential strategic action but said he would welcome an acquisition if it offered fair value for Aryzta.
Veraison co-founder Gregor Greber told this news service he is looking forward to the EGM and is convinced that “shareholder democracy” will win.
Veraison also rejected today’s (13 August) announcement by Aryzta that its board had nominated Andreas G. Schmid for election as new non-executive chairman at the EGM.
Potential buyers
Activistmonitor reported last month that PE funds such as
KKR [NYSE:KKR] and
Carlyle [NASDAQ:CG] are better positioned than strategics to make such a takeover offer.
Likewise, Castro sees Aryzta as an obvious target for PE funds.
PE funds Apollo Global Management [NYSE:APO] and Cerberus Capital Management have shown interest in the asset, as reported. Though Apollo has indeed explored a bid, it has cooled on the idea as the numbers did not add up, a source familiar with the development said. Apollo declined to comment.
A banker working with potential buyers said Aryzta could yet attract interest from a strategic player, noting that possible bidders could include Bimbo Bakeries or Grupo Lala.
Bimbo would make “tremendous sense” as a bidder, the source familiar said. The Mexican bakery, already a global leader in ambient bread, has recently gone on an acquisition spree in Aryzta’s frozen-bread space, he said, with recent acquisitions including Canada Bread and East Balt. An acquisition of Aryzta would secure its place atop the frozen-bread category, he said.
Lala makes less sense for business reasons, given its present focus on dairy, he said. But Mexico’s populist government and shaky business prospects could spur Lala to reallocate assets abroad, he said. He compared this rationale to that behind Turkey-based Yıldız Holding’s generous and hastily drawn-up acquisition of United Biscuits in 2014, at the start of Recep Tayyip Erdoğan’s presidency.
As well, Aryzta has reportedly attracted takeover interest from Toronto-based grocery and baking leader George Weston [TSE:WN].
Even as Aryzta seeks a bidder for its entirety, it continues to receive interest from potential bidders for individual units, the source familiar said; this news service
reported in June that Aryzta should sell its North American business to reduce complexity. But so long as a full takeover is possible, Aryzta is not engaging on piecemeal approaches, the source familiar said.
Aryzta did not respond to request for comment.
by Divya Grover in Mumbai, and Deane McRobie and Min Ho in London
