Aryzta uses Origin sale to expand

Irish-Swiss baked foods business Aryzta is using the €400m or so it will get from the near halving of its stake in Dublin-based agri-services business, Origin Enterprises to acquire a 49% stake in French speciality premium food business Picard.

Aryzta uses Origin sale to expand

Aryzta — established by the 2008 merger between the former IAWS Group and Swiss company, Hiestand — will pay €446.6m for the stake (largely from what was raised from its sale of 49 million shares in Origin last week) and will have the option to take 100% control of the French business in three-to-five years time and will have two seats on the company’s board.

Aryzta said, yesterday, it has entered into exclusive negotiations with Lion Capital — Picard’s owner — regarding the strategic investment.

Aryzta’s chief executive Owen Killian said Picard is an ideal replacement for the group’s Origin holding and will allow Aryzta to “strategically move up the value chain”.

“The investment in Picard is consistent with Aryzta’s strategy of consumer relevancy, through diversifying markets and channel positioning.

“Picard has delivered consistent revenue, earnings before interest, tax, depreciation and amortisation and market share growth over the past 40 years.

“It offers Aryzta the future potential to acquire a highly successful business-to- consumer platform, focused on premium speciality food, that complements Aryzta’s business-to-professional platform,” he added.

“Picard has a proven track record of consistent sales and before interest, tax, depreciation and amortisation growth. It will effectively replace Origin’s earnings stream and halve the earnings per share dilution arising from the recent partial sale of Aryzta’s stake,” said Goodbody Stockbrokers’ analyst Liam Igoe.

Picard is a market leader in speciality premium food in France and, according to its owners, has “an asset light, replicable model, capable of transferring internationally”.

Aryzta’s investment is reliant on approval from Picard’s works council and obtaining anti-trust clearance on the continent. However, Lion Capitalis talking up the deal.

“We are extremely proud of our track record in nurturing outstanding businesses, such as Picard, and selling the overwhelming majority of our companies to dynamic strategic buyers. In Picard and Aryzta we have a potent combination,” said Lion’s director Lyndon Lea.

Picard had revenues in its last full-year of €1.37bn. It will be expected by Aryzta — whose shares were down by over 7% yesterday — to make a net contribution of 3% to annual earnings per share.

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