Subsidiary of Irish-led Aryzta to buy out partner in Canada
Published 13/08/2010 | 05:00
A SUBSIDIARY of the Irish-led Swiss food manufacturer Aryzta is to buy out its partner in a Canadian food and confectionery company in a deal worth hundreds of millions of euro.
IAWS Group will pay CAD$475m (€349m) for the 50pc share the Tim Hortons doughnut and coffee chain has in Maidstone Bakeries.
Maidstone is based in Ontario and acts as exclusive supplier of fresh baked goods to Tim Hortons.
Aryzta said the buyout would put the company into a position to grow its North American manufacturing business by "leveraging Maidstone's experienced labour force" to serve the quick service restaurant (QSR) sector.
Maidstone generates earnings before interest depreciation and amortisation (EBITDA) of $67m (€49m) per annum.
The business is thought to be operating at about 55pc capacity at the moment. The Swiss company believes it can use the remaining capacity to supply new customers.
Joe Gill, an analyst with Bloxham's stockbrokers, said the rationale behind the move was clear.
"Maidstone's products complement other Aryzta units, including the recently acquired US subsidiary, Fresh Start Bakeries. Cross-selling opportunities exist between the businesses," he said.
"Together with its initial investment in Maidstone this deal brings Aryzta's all-in cost to €409m for a business with after-tax income of €35m."
Separately, Fresh Start Bakeries are investing in three bakeries in Asia and building a new one in Brazil.
The $48m (€36m) investments are expected to be positive earners within a year.
Bloxham's Joe Gill said the investments were a sign of "further dynamism by Aryzta as it strives towards a €4 EPS target compared to a projected €2.30 this year".
Aryzta's chief executive, Owen Killian, said both deals would enhance the value of the company.