Aryzta A.G. is set to ramp up its presence in North America with the announcement it has agreed to acquire Canada-based Pineridge Bakery and U.S.-based Cloverhill Bakery for total consideration of approximately €730 million ($1,013 million). Aryzta said it plans to invest an additional €70 million in the companies after the transactions are complete to support a strong growth pipeline and integration.
The two companies had combined revenues of about €400 million ($555 million) in 2013 with double-digit revenue growth and margins comparable to Aryzta’s Food Group margins.
“These acquisitions will significantly enlarge Aryzta’s manufacturing footprint in North America,” Aryzta said. “They extend Aryzta’s customer access in Canada and product portfolio in the U.S. by providing an attractive entry point into the high growth North American snacking market through leveraging these businesses successful customer partnership modes.”
Founded in Chicago in 1961, Cloverhill Bakery started out as a small, family retail bakery and has gone on to become an innovator of individually wrapped pastries for retail and food service customers. The company’s line of bakery snacks includes Danish pastries, cinnamon rolls, crumb cakes, cake donuts, honey buns and muffins.
Ancaster, Ont.-based Pineridge Bakery is a provider of specialty fresh and frozen private label and branded baked goods. Private equity firm Swander Pace Capital has owned the company since 2007. During Swander Pace Capital’s ownership, Pineridge invested nearly $40 million in growth capital to support customer initiatives, expand the company’s product base and drive operating efficiencies. Additionally, the company has added more than 100 new jobs and grown revenue to about $207 million since 2007.
“This transaction is the culmination of a successful six-plus-year partnership, and it’s a great result for all parties,” said Andrew Richards, managing director at Swander Pace Capital. “Pineridge Bakery will be able to transition their momentum to a new partner with tremendous experience and global reach. Aryzta acquires a leader in its space in North America, and we are able to return a significant result to our investors while leaving a growing company in capable hands. We couldn’t be more thrilled.”
In addition to the acquisitions, Aryzta announced its interim financial results for the six months ended Jan. 31. Operating profit within the Food North America group at Aryzta A.G. totaled €32,389,000 ($44,954,000) in the six months, down 27% from €44,482,000 in the same period a year ago. EBITA in the group was €89,899,000 ($124,801,000), down 0.9% from €90,738,000. Revenue eased 3% in the six months, to €714,683,000 ($991,957,000). Acquisitions added 1.9 points to growth, while currency had a negative impact of 5.2 points and underlying growth a negative impact of 0.2 points during the period, Aryzta said.
Overall, total Aryzta operating profit was €65,351,000 ($90,707,000), down sharply from €90,972,000, but EBITA increased 6% to €198,254,000 from €186,311,000. Revenues totaled €2,102,800,000 ($2,918,348,000) in the six months, up 2% from the same period a year ago.
“Aryzta continues to make excellent progress with our Customer Centric strategy in this the final year of the Aryzta Transformation Initiative,” said Owen Killian, chief executive officer of Aryzta. “We have begun to undertake consolidation opportunities to extend market share and customer relevance in what is a fragmented sector. Continued financial discipline and strong cash generation will support these growth strategies, as well as improve our overall risk profile. We are guiding double-digit growth in underlying e.p.s. for FY 2014.”
Aryzta last August acquired Pita Pan Old World Bakery, a Chicago Heights, Ill.-based provider of flatbreads and pizza crust to restaurant chains and wholesale bakery customers. Aryzta also owns La Brea Bakery, Otis Spunkmeyer, Fresh Start Bakeries, Pennant Foods, Sweet Life and Maidstone Bakeries of Canada.
