Aryzta shares in tailspin as investor support wears thin

By Geoff Percival

Shares in Cuisine de France owner Aryzta plunged by nearly 17% — wiping around €120m off the company’s value — after its AGM saw investors narrowly approve the food group’s funding plans and give only moderate backing to the company’s management.

Aryzta’s contentious plan to raise €800m through a rights issue, in order to pay down part of its €1.5bn debt pile and strengthen its balance sheet, squeezed over the line with the backing of less than 53% of shareholders.

It had been opposed by the Irish-Swiss baked food group’s largest independent shareholder, Spanish investment firm Cobas Asset Management, but supported by a number of share advisory firms, including ISS.

Cobas, which owns 14.5% of Aryzta, wanted fresh funds to be raised via a €400m rights issue and the sale of further non-core assets. Aryzta has been hampered by underperformance in the US and investor ire at the lack of certain asset disposals, including that of its stake in French food retailer Picard.

Gary McGann, brought in to lead Aryzta’s restructuring last year, was re-elected as chairman by just over 60.6% of shareholders, while 24.3% voted against him and 15% abstained.

Former Dublin Airport Authority boss Kevin Toland — introduced by Mr McGann as Aryzta’s new chief executive just 12 months ago — was re-elected, at his first AGM, with less than 58% of the vote. More than 27% of investors voted against him staying on to lead the company.

Aryzta shares are down by around 75% in the last 12 months and plummeted by nearly 19.4% at one point yesterday, knocking close to €130m off the group’s market value.

After the meeting, Aryzta said it has undertaken “an extensive process of shareholder engagement”.

It defended the size of its planned rights issue, saying the move is in the company’s “best interests” and is “the option with the highest probability of success”.

“While the board welcomes the support for the capital raise resolution, by the majority of shareholders, we will continue to consult with shareholders following the AGM, with a specific focus on those who opposed the resolution,” said management.

Cobas recently branded the €800m capital raise plan as being “inadequate” and of “significant risk” to Aryzta and its shareholders.

Last month Aryzta reported significantly reduced losses of €423m for its latest financial year and said it expected stable underlying performance and solid organic earnings growth for its current year, which runs to the end of next July.