- Private equity firm Brynwood Partners acquired Aryzta North America's take-and-bake pizza business through newly created portfolio company Great Kitchens Food Company. Terms of the deal were not disclosed.
- Great Kitchens announced Admir Basic, who previously worked for Aryzta, is the portfolio company’s president and chief commercial officer. Bill Steckel, who has a long career of serving in top fiscal roles at a variety of companies, was named the new company's chief financial officer. The purchase includes Arytza's Chicago-area 165,000-square-foot pizza crust manufacturing facility and 155,000-square-foot topping plant. About 700 employees work there.
- Brynwood Partners is a private equity firm with a large portfolio of consumer brands. It specializes in acquisition of brands that no longer fit in a larger company's portfolio. Aryzta is a Switzerland and Ireland-based specialty bakery company that owns facilities around the world. The company is facing dire financial times, with problems from its complex business structure and shutdowns from the coronavirus pandemic erasing about 98% of share value in five years, The Irish Times reported in May. The company as a whole has been considering strategic options, and U.S.-based investment firm Elliott Management Corp. has an $890 million offer on the table to buy the entire company.
The acquisition of Aryzta's pizza business marks the continuation of Brynwood’s investment in brands that have fallen out of fashion. Brynwood Partners has 56 different brands under its management, and a large portion are iconic names that have been offloaded by Big Food due to their positioning in slow-growing categories.
Brynwood's current portfolio includes Buitoni in North America and Hometown Food, which owns Pillsbury and Funfetti baking mixes, Hungry Jack, and baking staples including White Lily and Martha White brands. While this strategy can be risky if brands are outdated, too expensive to refresh or fall short of the growth targets, private equity firms like Brynwood have the advantage of operating these laggard businesses privately to quietly rebuild them into brands that cater to current consumer tastes.
Aryzta’s overall business has been struggling. According to the company’s 2020 annual report report, revenue from its North American business unit represented 43% of the company’s overall revenue, but the amount it generated had declined every year since 2016. Earlier this year, the company, which bakes goods including McDonald's hamburger buns and Otis Spunkmeyer cookies, furloughed about 30% of its workforce, gave a 15% to 30% salary cut to executives and leadership, and paused production at eight bakeries, including five in the United States. Arytza's last several months have been even bumpier with the unexpected departures of former CEO Kevin Toland last month and former chairman Gary McGann in August. Activist investors removed those two former executives, plus three others, from the bakery company's board in September.
While Elliott's acquisition offer is on the table, Arytza's new chairman Urs Jordi has said the company is not interested in a full sale. Last month, the company hired investors to work on the sale of non-core businesses. The Irish Times reported observers projected a potential quick sale of Arytza's North American businesses.
Consumers are continuing to stock up on easy-to-prepare foods with long shelf lives like frozen pizza as they spend more time at home because of the coronavirus pandemic. With many state and local governments restricting movement outside of the home, the deal timing is good for both Brynwood and Arytza, since it sold at a time of high demand.
At the same time, this acquisition makes sense for Brynwood as the private equity firm has already taken on frozen pizza brands and seen success.
"Our prior investment in the private label frozen pizza space with Richelieu Foods, Inc. was very successful and we are confident in the prospects for Great Kitchens,” Henk Hartong III, chairman and CEO of Brynwood Partners, said in the acquisition announcement.
Private equity firms, which control billions of dollars, have been turning their eyes toward the food and beverage industry as they look for an investment that provides consistent, if moderate, returns over the long run. As the food and beverage industry is relatively resistant to economic downturns, many firms have seen measurable success in this strategy — a particularly important point as the U.S. is currently weathering an economic downturn fueled by a pandemic that has sent people toward the supermarket in droves.
And if Arytza is interested in divesting more of its North American holdings, there may be more deals coming in the near future. Along with Otis Spunkmeyer, the company also owns artisan bread brand La Brea Bakery and Oakrun Farm Bakery. As the Brynwood deal shows, there are many private equity firms looking out for a good deal on well-known brands. Arytza's annual general meeting is scheduled for Dec. 15, and the company may take that opportunity to announce more deals in the works.