9/16/2020
Aryzta Sale in Doubt as Dissidents Score Boardroom Coup
Irish Times (09/16/20) Brennan, Joe
Aryzta's (ARZTY) potential sale to Elliott Management's Elliott Advisors unit has been thrown into doubt with a boardroom coup by dissident investors, who secured shareholder approval to appoint a new chairman. At an extraordinary general meeting (EGM) in Zurich, the Veraison (VZ)-led dissident group acquired 96.6% support from voters for Urs Jordi, former head of Hiestand International, to join the board. Shareholders also supported Jordi to become the new chairman. "It would certainly be the worst point in time to sell the company right now," Jordi said. "We need to streamline our organization." Veraison and Aryzta's preeminent shareholder, Cobas Asset Management, stated on May 13 that they had partnered to push for improved valuation following a decline in Aryzta's stock market value in recent years. The company simultaneously announced that it had hired investment bank Rothschild (PIEJF) to undertake a "strategic review" of the business, which resulted in unsolicited bids, including Elliott's. On May 21, the Veraison-led coalition urged Aryzta to hold an EGM to consider proposals that chair Gary McGann and non-executives Dan Flinter, Annette Flynn, and Rolf Watter be ousted and replaced by its nominees, including Jordi, Kamps founder Heiner Kamps, and former Aryzta Switzerland CEO Armin Bieri. In July, Flinter and Watter said they would be retiring at the meeting regardless of the outcome, while McGann announced his resignation from the board in August and Flynn announced her own hours before the EGM. Investors approved Kamps and Bieri's appointment at the meeting, while the dissidents also secured investor backing to remove Aryzta CEO Kevin Toland from the board in order to focus on his duties as group CEO. Watter said Toland has committed to staying with the group. Meanwhile, Aryzta's candidate for board chairman Andreas Schmid dropped out of the race on Tuesday. This leaves the company without any Irish board members, but has led to a higher weighting of non-executives with baking sector background. Aryzta has a market value of roughly €730 million, with stock having lost most of its value since the firm raised some €800 million in an emergency share sale in late 2018. McGann said at the EGM that "it would be difficult to overstate the challenges faced by Kevin and his senior team and the circumstances inherited by them—ranging from cultural, structural, commercial, operational, and strategic issues, all of which needed serious attention and in a number of cases deep remediation. Significant progress has been made on all fronts in executing a leadership strategy in global bakery. I acknowledge that the financial turnaround has been slower than you had expected and we had hoped for, and that significant further work is needed, particularly in one of the regions, which is now underway." McGann restated that Aryzta cannot be fixed by a "silver bullet." "The market is always slow to re-rate a company that has come through such a traumatic period and needing such a level of renewal in so many aspects of the business,” he admitted. "I do, however, believe that if we keep doing the right things, executed well and in the context of the right strategy, the market will eventually reward it."
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