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Elliott Is Said to Bid $872 Million for Swiss Baker Aryzta

This content was published on November 20, 2020 - 12:18

(Bloomberg) -- Billionaire Paul Singer’s Elliott Management Corp. has made a fresh takeover bid for ailing Swiss baking company Aryzta AG, people with knowledge of the matter said.

Elliott proposed an offer of about 0.80 Swiss francs per share in recent weeks and reiterated its interest in the past few days, the people said, asking not to be identified because the information is private. That price would represent a 32% premium to Thursday’s close and value Aryzta at about 794 million francs ($872 million), data compiled by Bloomberg show.

The U.S. investment firm has conducted due diligence and lined up financing for the potential acquisition, the people said. Aryzta shares rose as much as 21% on Friday, making it the biggest gainer on the benchmark Swiss Performance Index. They were up 17% at 12:46 p.m. in Zurich, giving the company a market value of 703 million francs.

Elliott’s proposed offer price is “more than adequate and recommendable” given the challenging environment, Roland French, an analyst at Davy, wrote in an email Friday.

“It would mark a significant return” for the company’s activist investors and “clean the psychological slate for many others,” French wrote.

CEO Exit

Aryzta’s recently-departed chief executive officer, Kevin Toland, was in favor of considering a potential sale and engaging with Elliott, the people said. The board of Aryzta is split on whether to pursue a sale or remain independent, the people said.

The company announced late Thursday that Toland would cease his role as CEO effective immediately, without providing further explanation. Chairman Urs Jordi, who has spoken publicly against a sale, will take on the role in an interim capacity pending the search for a replacement.

Elliott is seeking a friendly deal, the people said. Representatives for Aryzta and Elliott declined to comment.

Aryzta, which supplies buns to McDonald’s, hired Rothschild & Co. this year to conduct a strategic review and announced in September that Elliott was in advanced talks about a potential takeover bid. The company said late last month that negotiations had ended without a binding offer.

It has since appointed Houlihan Lokey Inc. and Alantra Partners SA to advise on asset disposals that will help it focus on its core markets. Aryzta’s brands include Otis Spunkmeyer cookies, La Brea Bakery bread and Cuisine de France pastries.

Board Shakeup

The move was one of the first under Jordi, a food industry veteran and trained baker elected as part of a September board shakeup that saw his predecessor apologize for failing to turn around the company. Earlier in his career, Jordi led Hiestand Holding AG, which merged with another firm to form Aryzta. He then served as CEO of Aryzta Food Europe & Asia Pacific from 2010 to 2013.

Now “would be the worst point in time to sell the company,” Jordi said at the Sept. 16 shareholder meeting. The new chairman said his goal is to simplify Aryzta, push innovation and strengthen performance to serve its customers.

Jordi is the “new strong man” at Aryzta, and it’s been clear since September that a new start would involve changing the CEO, according to analysts at Zuercher Kantonalbank. The chairman has a “clear vision” for turning the company around by focusing on core businesses and reducing debt, including through a likely sale of its North American operations, ZKB said.

Vontobel Holding AG analyst Jean-Philippe Bertschy wrote in a note to clients Friday that the timing of Elliott’s bid is “interesting” given Jordi is against selling the company. The stock will continue to be “highly volatile,” Bertschy wrote.

“A full takeover is the only way to create value for shareholders medium term given the level of the group’s indebtedness,” Jon Cox, an analyst at Kepler Cheuvreux, said in response to Bloomberg queries Friday. “I am not sure piecemeal disposals are going to help that much.”

(Updates with share move, analyst comments from third paragraph)

©2020 Bloomberg L.P.

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