It is expected the deals will add as much as 45 cents to earnings per share in the first 12 months.
The deals involve a $900m payout for Fresh Start and $180m for Great Kitchens. Financing the takeovers will be achieved with cash, bank borrowings and $140m worth of Aryzta shares.
Led by former IAWS boss Owen Killian, Aryzta said the deal would be enhance earning from the start. The acquisitions will further develop its market reach providing access to markets outside the US and Europe as well as diversifying client mix.
In a nine month trading update Aryzta reported weak consumer demand had resulted in a 9% drop in total sales to €2.2bn. In the third quarter the pace of that decline eased to 6.4%.
Mr Killian said the business was responding well to the tough economic conditions for consumers with the fall in sales in Europe most pronounced in Britain and Ireland, where the weakness in consumer demand has been pronounced.
Despite the malaise in many of the economies in which it trades, the group expects underlying earnings per share to show an increase on the previous year, boosted by currency movements and the impact of the acquisitions just announced.
Of the two deals, Fresh Start Bakeries, which includes the Pennant Food and Sweet Life businesses, has 29 production facilities in a number of countries.
It makes baked goods such as sliced bread, hot dog and hamburger buns as well as baking ingredients like fillings and glazes, while Fresh Kitchens is a north American pizza and sandwich maker.
The deal is the bakery goods group’s first major move since Aryzta was formed two years ago when IAWS acquired Hiestand in Switzerland.
Shares in the group rose sharply in Dublin in early trading boosted by the acquisitions. By mid-day they had shot up by €2.23, a rise of 8.33% on the day but fell back to €27.50 to close up 2.7%.
Davy Research said the group has a good record in deal-making and in speedily reducing acquisition-related debt. “Our immediate response is to recommend the shares,” it said.