- Flowers Foods, Hostess Brands, Japan’s Yamazaki Baking and Mexico’s Grupo Bimbo are reportedly interested in acquiring the European baking business Aryzta, according to Just Food. Aryzta hired investment firm Rothschild & Co. in April to review strategic options for the company.
- The European baking manufacturer has been struggling even after divesting €380 million ($450.6 million) in non-core assets and raising $943.7 million from investors in 2018.
- A piecemeal sell-off of the company was retracted as an option. The Irish Times reported Aryzta said it received "unsolicited interest" in its business ahead of the official release of the findings from its strategic review.
The use of M&A to bring value-added and trendy products into a company's portfolio is a trend throughout the food and beverage space, so it isn't surprising to see initial interest for a European bakery manufacturer that produces several well-known brands.
Although Aryzta focuses heavily on the European market, the company also oversees several brands in the U.S., including La Brea Bakery, Otis Spunkmeyer and Oakrun Farm Bakery. Together, these brands represent a range of bakery products from artisan breads to sweets — a diverse range of offerings which is likely to be of interest to both Hostess and Flowers.
Flowers Foods, which is the maker of Nature's Own, Dave's Killer Bread, Wonder and Tastykake, recently said it was interested in pursuing a strategy that expanded the presence of its top brands. Earlier this summer, Flowers also announced it would increase its focus on brand growth, product innovation and improving its cake business operations. Acquiring Aryzta could help accomplish both of these aims.
By bringing Aryzta into the fold, Flowers would gain access to Otis Spunkmeyer’s sweet treats business, which operates both in foodservice and directly to consumers, to help expand its cake business operations. Oakrun Farm Bakery also has the potential to play into the company’s innovation goal by providing a menu of frozen baked goods. During the pandemic, frozen food sales have spiked as consumers look to stock up on non-perishables.
Flowers Foods has experience in leveraging M&A to successfully grow its business. Flowers has grown largely through acquisitions, including Dave's Killer Bread, Alpine Valley Bread and Canyon Bakehouse, turning it into one of the largest producers of packaged bakery foods in the U.S. Last year, the CPG company had $4.1 billion in sales.
Similarly, Hostess has added a few smaller brands to the mix since it filed for bankruptcy in 2012, its second time through the restructuring process. It emerged a year later as a slimmed-down company focusing on its line of sweet treats, lead by the Twinkie. Since then, the company has been building its portfolio to attract consumers in adjacent areas where it didn't have a major presence. Late last year, Hostess added Voortman, a manufacturer of premium, branded wafers and sugar-free and specialty cookies.
Aryzta would serve as yet another adjacency for Hostess by adding artisan breads. In addition, taking on a Swiss-based company could open Hostess to a new market of consumers in Europe that may be interested in products that have been iconic on the other side of the ocean for generations.
For Hostess and Flowers, an acquisition offers an opportunity for these American companies to further tailor their portfolios to today's trends and better position themselves to grow and compete in a competitive market. But despite Aryzta's struggles, there are no shortage of companies looking to buy it. With Japan’s Yamazaki Baking and Mexico’s Grupo Bimbo also potentially interested, it is by no means a sure thing that Hostess or Flowers will emerge victorious in snapping up the struggling bakery operator.