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Paul Singer Targets Otis Spunkmeyer Cookies in Swiss M&A Battle

Jan-Henrik Förster, Ruth David and Scott Deveau
·3 min read

(Bloomberg) -- Billionaire Paul Singer thinks he can fix Aryzta AG, the troubled maker of Otis Spunkmeyer cookies. He is being stymied by the Swiss baker’s new leader, who wants to work his own way out of the firm’s years-long slump.

Singer’s Elliott Management Corp. made a takeover bid as recently as this week valuing the McDonald’s supplier at about 794 million Swiss francs ($872 million), people with knowledge of the matter said. The proposal came amid the abrupt departure of Aryzta’s chief executive officer, who supported a sale, the people said, asking not to be identified because the information is private.

The board is now split on which path to pursue, according to the people, and Aryzta’s recently-installed chairman Urs Jordi has publicly said he doesn’t want to sell. One analyst has called him “the new strong man” at the company: he’s been consolidating his power, taking on the role of interim CEO this week as the company announced the departure of Kevin Toland.

Jordi, a former Aryzta executive who joined its board in September, is seeking to arrest a slump that’s seen the firm lose more than 90% of its value since 2014. He has hired advisers to consider divestments in a bid to simplify a company once worth over $9 billion. In the background are a pair of disgruntled shareholders, who own a combined 26% of Aryzta.

The Aryzta chairman has “a clear vision” for a turnaround, and the trained baker’s attention to high-quality bread production is a welcome change from the former management’s focus on acquisitions, ZKB analysts said. Still, Aryzta shares are likely to remain highly volatile, according to Vontobel Holding AG.

“I am not sure piecemeal disposals are going to help that much,” said Jon Cox, an analyst at Kepler Cheuvreux. “A full takeover is the only way to create value for shareholders medium term given the level of the group’s indebtedness.”

Committed Financing

Elliott has conducted due diligence on Aryzta and continues to hope for a friendly deal, the people said. It’s already lined up financing for its potential offer of about 0.80 francs per share, which would represent a 32% premium to Aryzta’s Thursday close, according to the people. Representatives for Aryzta and Elliott declined to comment.

Investors cheered news of Elliott’s bid Friday, sending the stock up as much as 21%. It ended up 9.4% at the close in Zurich, making Aryzta the second-biggest gainer on the benchmark Swiss Performance Index and giving it a market value of 660 million francs.

The U.S. investment firm’s proposed offer price is “more than adequate and recommendable” given the challenging environment, Roland French, an analyst at Davy, wrote in an email Friday.

“It would mark a significant return” for the company’s activist investors and “clean the psychological slate for many others,” French said.

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