Activist investor Joos demands Aryzta sell assets and slash costs
A Swiss activist investor is mounting a campaign to block Aryzta's €800m capital increase, arguing the troubled McDonald's bun maker should instead sell assets and slash management layers, according to two people familiar with the matter.
Gregor Joos aims to amass a stake of at least 3pc through his investment company Larius Capital, insiders said, asking for anonymity because the campaign has not yet been announced publicly.
The fund is seeking co-investors and may try to reach 10pc through alliances with other shareholders, they said.
Aryzta's management has failed to turn the company around, Joos has told chairman Gary McGann. In a letter seen by Bloomberg News, he said the Zurich-based company should sell its ailing North American business and its 49pc stake in French frozen-food company Picard Groupe, urging Aryzta to focus more on Europe.
An Aryzta spokesman confirmed receipt of the letter but declined to comment further.
"What the activist is doing can be very dangerous for Aryzta, because it can start a squabble at a company that's already battered and fighting for survival," said Patrik Schwendimann, an analyst at Zuercher Kantonalbank.
"Asset sales are welcome, but everyone knows they're in financial hardship and can't get a good price" he said.
The activist has been involved in campaigns against Swiss asset manager GAM Holding, Credit Suisse Group and Gategroup through RBR Capital Advisors, where he was a partner.
Aryzta stock has lost about three-quarters of its value this year as it tries to reduce a mounting debt load.
Shares were up in recent days however, including a rise of as much as 5.8pc yesterday.
The baked goods maker has been trying to sell its stake in Picard without success, and has made multiple profit warnings due to lost contracts and rising costs.
Mr Joos's letter asserted that the company should engage in zero-based budgeting, an accounting concept made popular by 3G Capital, forcing managers to justify every expense, as often as each quarter.
He suggests Aryzta could also cut its tax bill by moving its headquarters from Zurich to another Swiss canton. (Bloomberg)