FDBusiness.com

Aryzta, the Zurich-based global speciality bakery business, has entered into exclusive negotiations for a strategic investment with Lion Capital in a speciality premium French food business. Under the terms of the agreement, Aryzta would acquire a 49% shareholding in Picard for €446.6 million. The purchase price will be largely funded with the net proceeds from the recent of placement Aryzta’s shares in Origin Enterprises, which yielded about €400 million, net of fees and taxes.

Picard’s FY 2015 revenue is €1.37 billion and its March 2015 EBITDA run-rate is €192 million. Picard has an enterprise value of €2.25 billion. Picard would be treated by Aryzta as an associate and would be expected to make a net contribution of 3% to Underlying EPS on an annualised basis, offsetting half of the negative 6% impact of the Origin placement.

Aryzta would have the right to exercise a call option in three to five years to acquire 100% of Picard. Picard is separately managed and separately funded with debt nonrecourse to Aryzta. Aryzta would have two seats on the Picard board.

The investment is be conditional on limited conditions including anti-trust clearance. Picard will consult its works council in connection with the investment.

Picard has market share leadership in speciality premium food in France, with a 40 year track record of revenue growth, EBITDA growth and market share expansion. Picard operates an asset light, replicable model, capable of transferring internationally.

“The investment in Picard is consistent with Aryzta’s strategy of consumer relevancy through diversifying markets and channel positioning,” says Owen Killian, chief executive of Aryzta. “It offers Aryzta the future potential to acquire a highly successful business-to-consumer platform focused on premium speciality food, which complements Aryzta’s business-to-professional platform. Picard is a highly predictable business and an ideal replacement for Aryzta’s Origin holding, allowing Aryzta to strategically move up the value chain. We are delighted to partner with Lion Capital, a private equity firm with a leadership position in branded consumer goods and retail.”