«Independent»: Aryzta facing into bitter lawsuit

Dublin / IE. (ii) Aryzta AG, the 1,8 billion EUR listed Swiss/Irish food group headed by Owen Killian, is facing a 60 million EUR lawsuit from a major shareholder, the «Irish Independent» reports. Swiss fund manager Peter Lehner is suing Aryzta over certain transactions prior to the merger of Irish food firm IAWS PLC and Swiss bakery outfit Hiestand Holding, which led to the creation of Aryzta AG (see also «Hiestand shareholder asks for better deal», bakenet:eu on 2008-07-07). Lehner´s case centres on a deal between IAWS and a hedge fund which saw the Irish company take control of Hiestand, then one of Switzerland´s biggest cake and bun makers.

In February 2008, Lion Capital bought a 32 percent stake in Hiestand from struggling hedge fund Focus Capital. Shares in the Swiss company had doubled in the previous ten months. At the time IAWS held a 32 percent stake in Hiestand. IAWS has refused to discuss whether it was offered the Hiestand stake when it was being sold by Focus. Four months later, in June 2008, Lion Capital sold its stake to IAWS. Hiestand shares had collapsed, halving in the months before this deal. This paved the way for the merger between IAWS and Hiestand.

IAWS paid Lion Capital a hefty premium for its Hiestand shares. The deal saw it pay 30 million EUR in cash and receive 12,7 million IAWS shares. Based on share values at the time, this transaction could have been worth close to 240 million EUR. Hiestand shareholders received 8,7 percent of the enlarged Aryzta as part of the deal. Lehner believes that all Hiestand shareholders should have received the same rate as Lion Capital for their shares. The Swiss fund manager is thought to have owned close to five percent of Hiestand prior to the merger deal, the «Irish Independent» explains.

It is thought that the case focuses on the decision to allow top IAWS executives, including Owen Killian, to exercise 4,2 million shares and options as part of the merger deal. IAWS executives landed the top three roles in the newly merged company. It is believed that this may also come under scrutiny as part of the lawsuit. Lawyers at Zurich-based Buis Burgi, declined to comment on the case. Sources have suggested that the case will go through a period of arbitration before reaching the court. It is believed that a hearing in Zurich may be scheduled for the autumn, the newspaper says.

The merger saw Aryzta shares hit 38 EUR on the opening day of trading, valuing the combined company at three billion EUR. Since then, shares have tumbled by about 40 percent.