In a strategic investment deal with private equity firm Lion Capital, Swiss food firm Aryzta will be buying a 49% stake in French premium food company Picard for €446.6m.
Aryzta, which recently sold 49 million shares of the agri business Origin Enterprises last Wednesday to earn over €404m, stated that this amount would be funding most of the Picard deal.
Aryzta CEO, Owen Killian, commented: "The investment in Picard is consistent with our strategy of consumer relevancy through diversifying markets and channel positioning. Picard is a highly predictable business and an ideal replacement for Aryzta's Origin holding, allowing the company strategically move up the value chain."
Market leader in France's speciality food segment and specialising in desserts, pies and breads, Picard has a 40-year history of EBITDA growth, revenue growth and market share expansion, and boasts a 2014 turnover of €1.37bn. The company value amounts to €2.25bn, while it showed a March 2015 EBITDA run-rate of €192m.
According to Aryzta, as Picard would be its associate, it would have to pay a 3% net contribution yearly to underlying Earnings Per Share (EPS) to offset half of the 6% negative impact due to the Origin deal.
Picard will have two members from Aryzta on its board. It will have debt non recourse to Aryzta and will be separately funded and managed.
As per the terms of the deal, in three to five years Aryzta can exercise a call option to buy 100% of Picard.
