DUBLIN (Reuters) – Swiss-based baker Aryzta (ARYN.S) (ARYN.I) unveiled two acquisitions for a combined $1.08 billion in deals it hopes will boost earnings and expand its reach in Europe and the United Sates, boosting its shares.
Aryzta sells freshly baked bread and pastries under brands like Delice de France and Cuisine de France in Europe. Its main U.S. brands are Otis Spunkmeyer and La Brea Bakery. The company said on Tuesday it had bought Fresh Start Bakeries, a supplier of specialty bakery products, and Great Kitchens, a supplier of pizzas and appetisers with a focus on the deli segment in the North American retail grocery channel. “From a business perspective we will operate with a greater geographic footprint and with much better channel access to consumers,” chief executive Owen Killian said in a statement.
“These acquisitions double our manufactured volumes with an additional 30 production locations in nine countries.”
The deals — $900 million for Fresh Start Bakeries and $180 million for Great Kitchens — are financed through cash, bank and other debt raised and Aryzta shares.
The company, which has its primary listing in Zurich and a second listing in Dublin, said it expected the deals to boost earnings by more than 45 cents per share over 12 months.
At 0954 GMT, its shares were up 10 percent to 41 Swiss francs in Zurich, and were up over 8 percent at 29 euros in Dublin.
“Our initial view is that this is a positive development for the company. It will enhance earnings, is acquired at a reasonable multiple, will broaden its customer base… and has good scope for synergies with the existing operations,” Goodbody analyst Liam Igoe said in a note.
Aryzta, formed in 2008 after Irish baker IAWS bought Switzerland’s Hiestand, said third-quarter revenue dropped in “still very challenging economic conditions”.
Aryzta said revenue for the 13 weeks to April 30 fell 4.6 percent to 823 million euros ($1.1 billion). It said it expected an increase in underlying EPS for 2010 over 2009. (Editing by Erica Billingham, Mike Nesbit) ($1=0.7453 euros)
peHUB Note: Fresh Start Bakeries was a portfolio company of Lindsay Goldberg, while Great Kitchens was a portfolio company of Arbor Investments.